Korea’s biggest conglomerate issues public pledge aiming to prop up partner firmsSamsung Group on Wednesday pledged a number of measures including a 610 billion won ($558.7 million) fund, patent rights and improved payment systems to help promote growth in its smaller vendors and suppliers.
Samsung signed an agreement at its Seocho headquarters outlining these and other efforts to become the second Korean conglomerate subject to government assessment as part of the mutual growth index designed to urge mega companies to help their vendors prosper.
The support ― to be given mostly in cash or low interest loans ― will cover more than 5,000 of Samsung’s vendors. Samsung also said it would be offering incentives to its bigger vendors who provide similar support to its smaller suppliers.
The 610 billion won support will be used mainly for research and development and other costs needed to promote the health of the vendors, Samsung officials said.
Some of Samsung’s patents also will be provided free of charge to its vendors, they added.
More than 250 people attended Wednesday’s event, including Kim Soon-taek, head of Samsung’s corporate strategy office and representatives from nine Samsung affiliates including Samsung Electronics, Samsung SDI, Samsung Mobile Display and Samsung Corp.
Samsung Electronics CEO Choi Gee-sung (second from right), head of the Commission on Shared Growth for Large and Small Companies Chung Un-chan (third from right), Fair Trade Commission Chairman Kim Dong-soo (third from left) and Kim Soon-taek, a Samsung Electronics vice chairman and head of the group’s planning department (second from left) at an event declaring the group’s commitment to fair trade and shared growth at Samsung Electronics’ office in Seoul on Wednesday. (Kim Myung-sub/The Korea Herald)
Lee Se-yong, head of Elentec and a group representing Samsung vendors, were also present along with over 160 other CEOs of such suppliers and government officials.
Led by the Cheong Wa Dae initiative, the government has been avidly advocating mutually beneficial growth between conglomerates and their smaller partners, urging the bigger corporations to take the lead to help create a level playing field.
At Wednesday’s ceremony, Samsung’s nine sister firms signed agreements with 3,021 of their bigger vendors, and these vendors in return signed up with 2,187 of their suppliers to create a co-dependent system of cooperation, Samsung spokespeople said.
The bigger suppliers will receive incentives from Samsung for keeping true to their pledges to help out their smaller partners.
While announcing these new measures, Samsung said it hoped to continue expanding its efforts to all of its vendors.
To achieve this goal, the group will install exclusive bureaus at its affiliates to handle mutual growth issues, while executives will be graded on how well they support suppliers.
Samsung said it would “more actively” lower prices according to the fluctuations in raw material costs.
Guidelines also will be put in place to promote fair and orderly transactions with vendors.
More payments will be offered in cash, and Samsung affiliates pledged to pay their vendors three times a month, up from the current twice a month.
Of the 56 local conglomerates included in the mutual growth index being promoted by the Fair Trade Commission, Hyundai Motor was the first to enter such a public agreement on mutual growth.
By Kim Ji-hyun (
jemmie@heraldcorp.com)
