Speculation is rising that the country’s large businesses will follow Samsung’s newly unveiled plan to withdraw from business involving procuring maintenance, repair and operation supplies.
Korea’s top conglomerate said Monday its flagship electronics unit and eight other affiliates plan to sell a combined 58.7 percent stake in iMarketKorea, the MRO company it set up in 2000.
The decision comes on the heels of mounting criticism that the big players choke smaller MRO businesses and cripple competition by giving all orders to their subsidiaries.
In the early 2000s, business groups including LG, SK and POSCO launched MRO firms to secure stable stationery supplies and instant repair services for office equipment.
But critics claimed that chaebol owners have used MRO companies to dodge taxes and hoard wealth within their families, as many of the firms are run by their children or relatives.
LG’s ServeOne is the top runner, posting nearly 3.85 trillion won ($3.66 billion) in sales last year, while iMarket Korea comes in second with 1.55 trillion won, followed by POSCO’s eNtoB with 603.6 billion won and Kolon Group’s Korea ePlatform with 464 billion won.
In response to public jitters, Hanwha Group pulled out of its MRO arm Hanwha S&C in July.
Others, however, seem to be sticking to a wait-and-see policy at the moment.
LG Group said it will “follow the direction society takes as a discussion is underway from a number of different angles.”
POSCO has currently no plan to dispose of its 64-percent share in eNtoB, a company official said.
“POSCO does not seek profits from the subsidiary but focuses on simplifying procurement processes and insuring product quality,” the official said, noting eNtoB’s operating profit margin hovers between 0.2 percent and 0.4 percent.
SK Group is also “looking into whether its MRO business encroaches on the market structure or the domain of small- and mid-sized firms,” an SK official said. SK Networks, its trading affiliate, holds a 51-percent stake in MRO Korea.
In efforts to rein in such dubious practices, the government is looking to levy inheritance and gift taxes on the wealth transferred via intra-group transactions. It plans to revise related laws in August to be implemented next year.
