"Export Contracts Completely Postponed"... Middle East War Continues to Impact SMEs

32 More Cases Than Last Week
Total Number of Reports Reaches 866

While expectations are rising for an end to the war between the United States, Israel, and Iran, a recent survey shows that domestic small and medium-sized enterprises (SMEs) in Korea continue to suffer losses due to the prolonged situation.

According to the Ministry of SMEs and Startups on May 27, as of 12:00 p.m. on this day, a total of 866 cases of damages and difficulties (including concerns) related to the Middle East situation have been reported by SMEs. This is an increase of 32 cases compared to the previous week. Since February 28, the ministry has been accepting online reports via its website, as well as phone and in-person reports through 15 regional export support centers.

Of the reported cases, 658 were classified as damages and difficulties, while 137 were concerns. Among the types of damages and difficulties reported (multiple responses allowed), transportation disruptions were the most common with 280 cases (42.6%). This was followed by other issues with 248 cases (37.7%), increases in logistics costs with 244 cases (37.1%), contract cancellations or suspensions with 218 cases (33.1%), business trip disruptions with 118 cases (17.9%), and delayed payments with 92 cases (14.0%). For concerns (multiple responses allowed), transportation disruptions were also the most frequent with 93 cases (67.9%), followed by other issues with 46 cases (33.6%), and loss of contact with 10 cases (7.3%).

By country, the largest number of reports came from Middle Eastern countries other than Iran and Israel, such as the United Arab Emirates and Saudi Arabia, with 479 cases. There were 97 cases reported in Iran and 92 in Israel. Reports of damages from countries outside the Middle East reached 277 cases, with a steady increase observed.

As for major examples, a health tea manufacturer is facing difficulties as the unit prices of not only vinyl packaging materials but also basic packaging supplies such as glue and tape have all increased. Although the company has been using Chinese-made packaging materials to reduce costs, these prices have also surged, leading to a decline in operating profit.

There is also an SME that signed two contracts in January but has not yet been able to ship the products. Due to delays in the shipping schedule, the company experienced disruptions to its overall planned timeline. This company estimates that the total amount of damage, including increased shipping fees and contract deposits, will be approximately 200 million won.

A cosmetics manufacturer reported that its Middle Eastern buyer has been continuously postponing orders and related plans since January, citing ongoing uncertainty in external circumstances. In addition, a used car export company had its overseas business trip to Dubai canceled in February due to the war. The scheduled visit to Korea by a Middle Eastern buyer in March was also canceled. As a result, all used car export contracts have been indefinitely postponed.

This content was produced with the assistance of AI translation services.