Business sentiment of South Korean companies operating in China has recovered after the world’s second-largest economy released better-than-expected economic data for the first quarter of this year, a survey showed Sunday.

According to a survey of 214 Korean firms operating in China conducted by Korea Institute for Industrial Economics & Trade, Korea Chamber of Commerce & Industry’s Beijing office, and The Korea Chamber of Commerce in China, their business survey index (BSI) for market condition outlook stood at 106 for the second quarter ending June and sales outlook 120 during the same period.

A BSI is based on a survey response of companies’ business performance, revenue, costs, business environment, and difficulties, and ranges between 0 and 200. A reading above 100 means there are more companies optimistic about their business, whereas a reading below 100 means there are more companies pessimistic about their business.

The reading for the April-June period is up 23 points from the previous three months that stood at 83 for market condition outlook and 33 points for sales outlook that came at 87.

Korean companies have turned more optimistic about their business conditions in China after the country’s economy in the first quarter ended March expanded at 6.4 percent from a year earlier, 0.1 percentage point higher than analysts’ poll of 6.3 percent. The better-than-expected growth in its gross domestic product (GDP) led companies’ business sentiment in the country to recover.

By sector, the BSI for local sales rose significantly to 116 for the second quarter and facility investment to 108, rebounding for the first time in four quarters. The index for system policy was still below 100 at 87 but it was the highest since the survey index began to be compiled.

When it comes to overall system and policy, the Chinese government passed a new foreign investment law last month that bans forced technology transfer, fostering fair competition. Hopes are also rising that electric vehicles equipped with secondary batteries manufactured by Korean firms will be subject to the Chinese government subsidy.

As for sales outlook by industry, the reading for most sectors except for textiles and clothing remained above 100. The manufacturing segment painted a rosy picture for the second quarter, with its reading coming at 120, above 100 for the first time in two quarters, and electronics and electric sector at 148 and metal machine 148. The reading for automobile (119), chemicals (123), and retail (123) sectors also rebounded to above 100.

By Kim Dae-gi and Lee Eun-joo

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