February 5, 2014 2:23 am JST

Half of South Korean firms in Japan pessimistic about 2014

KOICHI KATO, Nikkei staff writer

SEOUL -- South Korean companies operating in Japan are painting a grim picture of business in 2014, expecting an unfavorable won-yen exchange rate to sour profits.

     Half of such firms polled by the Korea International Trade Association in late January said the business climate will prove worse this year than in 2013. Only 21% expect an improvement, while 29% see this year shaping up much the same as last year.

     The survey was based on responses from 30 manufacturing and 38 nonmanufacturing businesses.

     Despite the preponderance of pessimists, however, only 9% of companies said they plan to scale back their operations in Japan.

     The survey showed the won's strength to be the top cause for concern, with 61% of respondents naming it a negative factor. Japan-South Korea relations, fingered by 28%, was the second-biggest source of worry.

     When firms were asked what exchange rate would be necessary to turn a profit, responses averaged 1,127 won to 100 yen. Many companies are having trouble remaining profitable at the current rate of 1,073 won to 100 yen.