Revenue of Korean enterprises that contracted for the first time ever in 2014 further shrank last year due to sluggish performance of manufacturers, taking a toll on their research and development spending.

Companies with 50 regular workers or more and a capital of 300 million won ($ 254,863) totaled 12,460 as of 2015, adding 43 from the previous year, according to business activity survey released by Statistics Korea Tuesday. They took up 2 percent of total domestic corporations and 60 percent of total corporate sales.

The annual sales of these enterprises (excluding financial institutions and insurance) reached 2,159 trillion won, down 3.2 percent from the previous year, stooping two years in a row. The manufacturing sector that took up 60 percent of the total sales figure fell 5.3 percent to 1,312 trillion won.

“The fall was biggest in the oil refining and chemical product business,” said Kang Yoo-kyung, the managing director of statistics planning division at the government data office. International oil prices that had averaged at $103 a barrel in 2013 sank to $53 in 2014 and $32 in 2015. Depressed oil prices have shaved revenue, while helping the balance sheet at oil refiners for the last two years, he said.

While most domestic players remained in the dumps, real estate and renting gained 33.7 percent in revenue thanks to government-motivated housing boom.

Pretax net profit rose 16.0 percent on year to 109 trillion won last year thanks to saving in production cost from cheaper oil imports. Net profit of the manufacturing sector added 6.9 percent on year to 65 trillion won.

Higher profit, however, has not led to increase in research and development amid foggy economic prospects. R&D investment (excluding financial institutions and insurance) fell 10.1 percent in 2015 from the previous year to 39.2 trillion won. Manufacturing shaved the most with R&D spending decreasing 8.3 percent to 34.7 trillion won. The cut was most evident in electronic components, shipbuilding and other transportation equipment and pharmaceuticals.

R&D spending that kept up more than 10 percent growth from 2011 to 2013 rose slightly in 2014 before falling for the first time last year since the data was tracked from 2006.

By Lee Seung-yoon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]