918 Cases of Damage to SMEs Due to Prolonged Middle East Conflict: "Rising Component Costs and Supply Disruptions"

It has been reported that South Korean small and medium-sized enterprises (SMEs) continue to suffer from the prolonged Middle East conflict, facing issues such as transportation disruptions and rising supply costs.

According to the Ministry of SMEs and Startups on June 12, the total number of reports regarding damage, difficulties, and concerns from SMEs related to the Middle East conflict reached 918 as of noon today, an increase of 19 from the previous week.

Of these, 708 cases were categorized as damage or difficulties, up 18 from the previous week, while 141 cases were categorized as concerns, an increase of 1.

Regarding the types of damage and difficulties (with multiple responses allowed), transportation disruptions were the most common at 287 cases (40.5%), followed by rising logistics costs (37.9%), contract cancellations or suspensions (32.2%), travel disruptions (17.2%), and non-payment (13.4%).

For concerns, worries about transportation disruptions also accounted for the largest share at 95 cases (67.4%).

By country, damage and difficulties related to Middle Eastern nations, including the United Arab Emirates (UAE) and Saudi Arabia, totaled 599 cases (70.6%).

Among these, cases related to Iran and Israel accounted for 101 (11.9%) and 95 (11.2%), respectively.

In one major case, a company reported that the purchase price of components had risen by 30 to 40 percent, and it continues to face difficulties in securing volume and making timely deliveries.

Another company reported that transportation costs had doubled, and due to the rise in both shipping and raw material prices, costs have reached twice the level of the original estimates.

There were also reports of a contract being put on hold after contact was lost with a major UAE distributor during the final approval stage due to the outbreak of the war, with the company also noting a 20 to 30 percent increase in raw material costs.

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.