The number of active businesses in South Korea stood at 10,321,407 at the end of last year, marking a 1.7% increase from 2023 and the smallest annual gain since 2005. After peaking at 7.5% in 2020, the growth rate has steadily decelerated—to 6.4% in 2021, 5.1% in 2022, 2.8% in 2023 and 2.0% in 2024—before dipping into single digits for the first time last year.
New business registrations fell by 4.1% to 1,168,273, extending a five-year downward trend and reaching their lowest level since 2014. Although closures also declined by 3.2% to 975,681, the drop was insufficient to sustain overall growth. The ratio of closures to new openings climbed to 83.5%, meaning that roughly 84 of every 100 enterprises launched last year shuttered within twelve months.
Long-established firms were hit particularly hard. A record 317,406 businesses that had operated for at least five years ceased operations—accounting for 32.5% of all closures, another historic high. More than half of all shutdowns (50.4%) were attributed to lackluster performance, the largest share since the aftermath of the 2009 financial crisis.
The foodservice sector suffered a deeper slump. The number of active food businesses fell 1.9% to 798,969, dipping below the 800,000 mark. New restaurant openings plunged 13.6% to 131,014—the sharpest decline since comparable data began in 2011—while 142,557 eateries closed, producing a net loss of 12,443 establishments, five times larger than the previous year’s net decline. Closures of eateries operating longer than five years reached 41,659, the highest on record, and restaurants with over 20 years in business saw 2,797 closures—up 61% from 2021 and also a new high.
Adding to small businesses’ woes, the recent court decision to terminate rehabilitation proceedings for Homeplus raises fears that a final bankruptcy could ripple through its franchisees, suppliers and partner firms. In response, the government has announced KRW 440 billion in emergency liquidity support for Homeplus-affiliated SMEs and is raising the maximum loan ceiling under its small-business stabilization fund from KRW 70 million to KRW 100 million.