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The Effect of Low Yen and Countermeasures - Results of Business Survey -

Author Kang Doo Yong, Kim Jae- Duk, Lee Won Bok ,Hong Sung Wook, Date 2013.08.29 Issue No 564

KIET conducted the survey on the domestic manufacturing enterprises at the point of time the half year has passed since the trend of the low yen began in earnest.


For the effect of the low yen, the 45% of the surveyed companies responded that they already sense the effect while the 32% responded the low yen would affect the companies in the future if the trend persists, and the 23% answered there is no effect of low yen.   


- Among the enterprises who responded the low yen is already affecting the enterprises,  the 12% mentioned that the effect is serious while the 33% answered the effect is yet so high.


- For the individual sectors, the high ratio of the enterprises engaging in electronics ( 55%), machinery (61%) and automotive(51%) industries responded the lower yen is already affecting their business while the 57% of the shipbuilding enterprises added that there is no effect of weak yen.


The main effects of the weak yen were surveyed to be the decline in export(40%), the aggravated profitability(22%) and reduction in import cost(21%).


The 38% of the enterprises pointed out the effect of the decline in the cost of procuring parts and materials resulting from the weakened yen, and the respondents who mentioned the same effect, witnesses the average decline rate of 4.8% in their procurement.


For the countermeasures to the weakened yen, the companies responded the followings in order: Improving the design and quality of their products(28%), no plan to respond to the weak yen(24%) and considering price cut(22%).


The enterprises have a weak capability to manage the fluctuation of exchange rate and they demand the government measures such as the expansion of liquidity supply and the improvement in the infrastructure supporting export.  


Among the leading manufacturing enterprises, only 12% responded that the effect is serious and the significant numbers of enterprises answered hat hey not have any plan to respond to the weaken yen, which implies the effect of the weak yen is less greater than we have concerned.     


- However, there is a possibility that the effect could be greater if Japanese companies reflect the weakened yen on their export price, or pursue aggressive management resulting from the improvement in their competitiveness.