S. Korean retailers seeking to expand overseas businesses

S. Korean retailers are competitively foraying overseas, seeking new sources for business growth to…

S. Korean retailers are competitively foraying overseas, seeking new sources for business growth to replace the much-saturated domestic market, but the latest industry data indicate they will have to wait before any meaningful profit.

According to the survey by the Korea Chamber of Commerce and Industry (KCCI), annual sales by 61 retailers operating abroad have been on the increase since 2010 when they rose 17.2 percent on-year. Their combined sales for 2013 are predicted to increase 39.6 percent compared with the previous year.

On the back of such rosy results, 82 percent of those surveyed said they will expand their overseas business next year. But their balance sheets say otherwise.

"Despite the aggressive expansion of key local discount chain operators, they failed to take profits in overseas markets, especially China," Hong Sung-soo, an analyst at NH Investment & Securities Co., said by phone. "It is difficult to predict when the local discounters will reach the break-even point."

Nevertheless, the retailers have to bet on their overseas businesses when domestic sales are shrinking, with last month's sales estimated to have decreased 4.9 percent from the same month last year.

The KCCI survey showed 53 percent of the respondents plan to launch or expand their overseas business next year in China because of the sheer size of its market. As of November, China is the biggest destination for South Korean retailers. The survey said 37 percent are planning to head to Vietnam and 35 percent to Indonesia.