More than half of big Korean corporate names are concerned about the negative impact from the trade fallout with Japan and expect a 2 to 3 percent toll on their top and bottom line as a result, a survey showed,.

According to a poll by Korea Economic Research Institute (KERI) released Monday, 51.6 percent of the country’s 1,000 top companies by revenue feared adverse effect from Tokyo’s export restrictions on Korea. The remaining 48.4 percent did not expect much impact.

Since early July, Japan has tightened export curbs to Korea of three key materials needed to make semiconductors and display panels. This month, the country removed Korea entirely from its list of “trusted trade partners” that enjoy fast-track export status on shipments falling under strategic and sensitive categories. So far it has not listed additional items apart from the three materials that require case-by-case clearance for shipments to Korea.

In a tit-for-tat move, Korea crossed Japan out from its own white country list.

Despite Tokyo’s claim that the measures were taken for national security reasons, Seoul authorities saw them as retaliation for Korean court rulings on wartime reparation claims during Japan’s 1910-1945 occupation of Korea. Tokyo maintains that all claims were settled in a 1965 treaty that normalized bilateral relations.

Korean companies expected to see a 2.8 percent dent on their revenue from reduced trade with Japan, according to the survey. The machinery sector was expected to take the biggest blow at 13.6 percent, followed by petrochemical goods (-7 percent), semiconductors (-6.6 percent), steel (-3.9 percent) and mobile communication devices (-2.7 percent).

When taking just the companies that anticipate a negative impact from the curbs, the expected loss was doubled to 5.7 percent.

Companies as a whole estimated a 1.9 percent drop in their operating profit as a result of the trade war with Japan. The most vulnerable sector was again machinery (–7.9 percent), followed by petrochemical goods (-5.4 percent), semiconductors (-5.1 percent), display panels (-2.4 percent) and steel (-1.9 percent).

Earnings were expected to slide 3.7 percent for those companies that predicted a detrimental impact on their business.

As an immediate action, 53.7 percent of the respondents said finding substitute importers was imperative. Other proposed solutions were finding replacement materials (15.9 percent), temporary downsizing (8.5 percent) and reorganizing business portfolios (8 percent).

In the longer run, companies said they would secure replacement imports (28.8 percent) and invest in localization of tech materials (25 percent). Other solutions cited were finding alternative materials (14.4 percent), portfolio realignment (11.5 percent), downsizing (4.8 percent) and moving production overseas (1.4 percent).

By Kim Yeon-joo and Kim Hyo-jin

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]