[Zombie Companies, On the Edge of Collapse] 'The Root of Korea's Industry Is Shaking'

In 2024, three simultaneous threats — high interest rates, global trade conflict, and real estate PF defaults — created an unprecedented need for structural industrial reform. According to data jointly released by Korea's four major banks (KB, Shinhan, Hana, Woori) on April 7, 2025, "distressed signal companies" reached a record 2,339 — exceeding the 2009 global financial crisis (1,744) and post-COVID 2022 (2,067). These companies cannot cover even interest payments from operating income and face imminent restructuring or court receivership.

Triple pressure: (1) High interest rates — the Bank of Korea's 2023 corporate analysis shows 42.3% of domestic non-financial corporations had interest coverage ratios below 1. Over 4 in 10 companies cannot cover financing costs from operating income, particularly severe in manufacturing, construction, and franchise distribution. (2) US-China tech hegemony — both nations intensifying subsidies and tariffs on semiconductors, batteries, steel. Mid-size component companies face severed supply chains, reduced orders, and broken trust networks. The Korea International Trade Association warned of Korean export industry isolation. (3) Real estate PF defaults — savings bank net losses of 397.4 billion won in 2024 (second consecutive year of losses), delinquency rates at mid-8% — highest since 2015.

Global comparison: Korea's marginal enterprise ratio stands at 19.5% as of Q3 2024, second highest among G5+1 nations behind the US (25.0%). KOSDAQ marginal enterprise ratio: 23.7% — more than double KOSPI (10.9%). By sector in Q3 2024: real estate 33.3%, professional/scientific/technical services 24.7%, wholesale/retail 24.6%, IT 24.2%. Policy dilemma: selective restructuring vs. zombie company maintenance. US model: productivity-based restructuring with employment/technology transfer policy; Germany: restructuring linked to long-term industrial policy and green transition. "Korea remains trapped in short-term liquidity crisis response, lacking fundamental industrial constitution change." Three systemic risk spread pathways: (1) regional financial institution health collapses; (2) corporate bond markets freeze; (3) non-bank financials face liquidity crises. "2,500 distressed signal companies possible by end-2025 — neither indiscriminate bailouts nor neglect is a solution."