Despite the Recession... Holding Companies Harvest Trillions in Royalties

[Asia Economy Reporter Park So-yeon] Last year, the trademark (brand) usage fees received by major group holding companies from their affiliates amounted to hundreds of billions of won. Brand usage fees refer to service charges paid by affiliates for using trademarks such as corporate identity (CI).

According to the Financial Supervisory Service's electronic disclosure system on the 5th, the group that received the highest trademark usage fees last year was LG, collecting 236.7 billion won from its affiliates.

LG Corporation earned the most royalty income from LG Electronics. In the past year alone, it received a total of 101.4 billion won in royalties from LG Electronics.

Next, SK Corporation collected 228.1 billion won from its affiliates last year. The affiliate that paid the most royalties was SK Hynix, which paid a total of 80.5 billion won in royalties last year.

Following that, Hanwha recorded total royalty income of 112.5 billion won, with the largest amount of 40.65 billion won coming from Hanwha Life Insurance among its affiliates.

Hanwha had been receiving about 5 billion won in royalties quarterly from Hanwha Life, but from the second quarter of last year, the royalties surged to about double, exceeding 10 billion won. The top five holding companies with high royalty income also included CJ (72.8 billion won) and Lotte Holdings (49.6 billion won).

In this regard, the financial investment industry points out that since the shares of holding companies are concentrated among major shareholders, they can subjectively set brand usage fees, making it urgent to establish objective standards to enhance shareholder value across the entire group.

An industry insider said, "Except for dividends applied uniformly, many parts of the costs such as royalties and service fees paid by subsidiaries to holding companies are based on individual contracts that are kept confidential," adding, "Considering the relationship between holding companies and affiliates, there is a possibility of misuse such as unfair transactions, so establishing objective standards is necessary."

This content was produced with the assistance of AI translation services.