Number of newly formed firms up 12.6% in 2014: data

The number of new companies grew by double digits in 2014 as more people took advantage of steady economic growth to go into business, government data showed Wednesday.

In 2014, some 843,000 new companies were created, up 94,000 or 12.6 percent, from the year before, Statistics Korea said.

Employees working for these companies reached over 1.34 million, a gain of 12.2 percent from a year earlier.

The rise follows Asia's fourth-largest economy growing at a stable 3.3 percent, which is much better than the 2.7 percent growth being projected for this year.

While newly launched companies rose sharply, the total number of firms that closed during the one-year period fell 10.4 percent on-year to 664,000, it said.

The rise in new companies and the drop in closures contributed to more "operational companies" doing business in South Korea last year vis-a-vis 2013. Operational companies refer to firms that generate profit and hire workers.

The statistical office said there were some 5.56 million operational companies, up 3.4 percent from a year earlier.

Among operational companies 15.2 percent were new businesses, up 1.3 percentage point from the year before, it said.

The latest data, meanwhile, showed that half of all newly launched businesses in 2013 closed within two years, with the low survival rate of the service sector playing a part in the weak numbers.

The statistical office said only 47.3 percent of all businesses were still open after the second year in 2013.

The data showed around 60 percent of manufacturing, transportation and real estate-related businesses reached the second year, while estimates for wholesale and retail, hospitality services, publication and information sectors hovered in the 40-percent range.

"Exact cause for lower survival numbers of some companies has not been determined, but most businesses that fail early on are small, family-run affairs with owners having limited expertise and funds," a statistical office source said. (Yonhap)