New Businesses Hit Six-Year Low of 922,000; Business Closures Reach Record High

Proportion of New Businesses Among Active Firms at Record Low of 12.1%; Business Closures Up by 40,000

News [Yonhap News Archive Photo]

Last year, the number of new businesses recorded its lowest point in six years, while the number of businesses that closed (as of 2023) was the highest since statistics began to be compiled.

The declining birth rate of new businesses and the rising death rate among active firms indicate a slowdown in economic dynamism.

The National Statistical Office announced these findings on the 23rd in the results of the '2024 Business Vitality Administrative Statistics (Preliminary)' report.

Last year, the number of new businesses was 922,000, a decrease of 33,000 (-3.5%) from the previous year. This is the lowest figure since 2018 (927,362).

This marks the fourth consecutive year of year-on-year decline since 2020 (1,068,917).

By industry, new businesses were most numerous in wholesale and retail trade (230,000), real estate (169,000), and accommodation and food services (144,000).

However, real estate (-16,000, -8.8%) and accommodation and food services (-14,000, -9.0%) saw significant decreases.

The slowdown in the real estate market and sluggish domestic demand are considered the main factors.

The new business birth rate, which represents the proportion of new businesses among active firms, fell to 12.1%, a decrease of 0.6 percentage points (p) from the previous year. This is the lowest level in 13 years since statistics began in 2011.

The survival rate of businesses that were newly established in 2022 and were still active by 2023 was 64.4%, a decrease of 0.5 percentage points (p) from the previous year. This means that 35.6% of businesses established in 2022 did not survive for even one year.

However, the 5-year survival rate for businesses established in 2018 increased by 1.6 percentage points (p) from the previous year to 36.4%, marking an all-time high.

The number of businesses that closed among those active in 2023 was 791,000, an increase of 40,000 from the previous year, making it the largest number since statistics began.

The business closure rate, the proportion of closed businesses among active firms, rose to 10.5%, an increase of 0.3 percentage points (p) from the previous year.

By industry, closed businesses decreased in real estate (-3,000, -2.1%) but increased in wholesale and retail trade (17,000, 8.8%) and transportation and warehousing (12,000, 26.6%).

As the number of new businesses exceeded the number of closed businesses, the total number of active firms in 2023 increased by 103,000 to 7,642,000 compared to the previous year.

The age of representatives of active businesses was most concentrated in their 50s (29.9%), followed by their 60s (23.8%) and 40s (22.1%).

Due to an aging population, representatives in their 60s (4.3%) and 70s and above (9.9%) showed higher-than-average growth rates, while those under 30 (-6.8%) and in their 40s (-2.1%) decreased.

The number of active businesses with female representatives was 3,045,000 (39.9%), an increase of 1.8 percentage points (p) in proportion compared to the previous year.

The number of high-growth companies with sales increasing by 20% or more last year was 5,403, a decrease of 298 from the previous year.

Among these, 'gazelle companies' (businesses with less than 5 years of registration) numbered 1,356, a decrease of 44 from the previous year.

The number of companies with sales growth of 10% or more was 17,541, a decrease of 892, and among these, gazelle companies accounted for 3,118, a decrease of 146. Yonhap News