Busan, South Korea – The streets of Busan, once bustling with small businesses catering to locals and tourists alike, are now witnessing an alarming rise in shuttered storefronts. The prolonged economic downturn has hit the city’s self-employed population harder than ever, with more than 60,000 businesses closing in 2024 alone. Despite government efforts to provide relief, questions are mounting about the effectiveness of current support measures as small business owners face mounting challenges.
The situation reflects a broader crisis unfolding across South Korea, but Busan stands out for its dramatic declines. The city’s self-employed population, which forms the backbone of its local economy, has plummeted to just 294,000 as of late 2024—the lowest figure since official statistics were first recorded in 1989. Over the span of six months, more than 23,000 self-employed individuals have been forced to give up their businesses, highlighting the severity of the economic challenges.
Behind these stark numbers are stories of resilience worn thin. A former café owner in Nampo-dong shared their struggles to keep the business alive amid declining foot traffic and rising expenses. Having weathered the pandemic, they hoped for recovery in 2023 but instead faced dwindling sales. Despite applying for government assistance to cover restoration costs after closure, they found the support insufficient. “The aid covered some immediate expenses, but it didn’t address the deeper issues. Customers simply aren’t spending like they used to,” they lamented.
This sentiment echoes across Busan’s small business community. Analysts and business advocates argue that while government programs such as the “Business Closure Support Program” offer some relief, they fail to tackle the structural issues driving businesses to close. High operating costs, stagnant consumer demand, and a lack of comprehensive long-term strategies are leaving many entrepreneurs with few options but to shut their doors.
The crisis has also led to an ironic side effect: booming demand for demolition services and secondhand goods markets. With so many businesses closing, companies specializing in dismantling commercial spaces are now busier than ever. One contractor noted that they now handle over 30 commercial demolitions a month, a volume they never anticipated. “It’s bittersweet. Our business thrives on the struggles of others, and it’s a reminder of how widespread this crisis is,” they explained. Meanwhile, the influx of used furniture and equipment has flooded secondhand markets, where buyers seek bargains from the remnants of closed businesses.
Economists have pointed to several factors fueling this crisis. At its core is a prolonged stagnation in domestic demand. With household consumption remaining weak, small businesses that rely on local customers are bearing the brunt of reduced spending. Adding to the strain are rising rents and utility costs, which have significantly increased operational expenses. Many business owners have also pointed to difficulties recovering from the pandemic, as government subsidies and aid that once provided a lifeline have gradually been scaled back.
Experts have criticized the government’s response, describing it as reactive rather than proactive. While initiatives like financial grants and retraining programs are valuable, they are seen as addressing symptoms rather than causes. Policymakers are being urged to shift focus toward stimulating consumer spending and lowering the financial burdens on small businesses. Proposals include reducing commercial rents, providing targeted tax relief, and implementing direct cash transfers to reinvigorate local economies.
The future remains uncertain. With the economic outlook for 2025 offering little optimism, many small business owners are bracing for further challenges. Rising interest rates and persistent inflation threaten to exacerbate the existing crisis, leaving business owners and policymakers alike searching for solutions.
The crisis unfolding in Busan is more than an economic story—it’s a reflection of the human cost of systemic inefficiencies and economic stagnation. Behind every shuttered storefront lies a family grappling with uncertainty, a community losing a local institution, and a city searching for a way forward. While the government’s initiatives are a start, they are far from enough to reverse the tide. Without a bold and comprehensive approach, the once-vibrant small business ecosystem of Busan risks being permanently diminished.
