[The Editors' Verdict] The Delivery Price Linkage System Is Also an Issue Among Euls

‘Gapjil’ can be expressed in English as ‘high-handedness’ or ‘abuse of power.’ In the past, when referring to Korean Air’s ‘nut rage incident,’ foreign media also used the term ‘gabjil’ because there was no suitable English equivalent.

The terms Gap and Eul originally have no particular meaning. Therefore, Gapnam Eulnyeo (甲男乙女) refers to ordinary people. However, the actual meaning in Korea is different. In legal contracts, Gap and Eul are simply contracting parties, but in Korea, the Gap-Eul relationship often signifies a hierarchy, the powerful and the submissive, or large corporations and small and medium-sized enterprises (SMEs).

The recently piloted Delivery Price Linkage System is a landmark event that will bring change to the Gap-Eul relationship. It is something countless Euls have longed for.

Although there are many hurdles to overcome, the fact that the first step was taken recently, albeit with difficulty, is thanks to the global supply chain crisis and inflation, which caused raw material prices to skyrocket since last year. This provided SMEs with an opportunity to correct structural contradictions and the tilted playing field during a crisis.

There was also a major event that brought change to the Gap-Eul relationship nine years ago. In 2013, a recording of a Namyang Dairy sales representative verbally abusing a dealership owner was released online, sparking public outrage. The company’s practice of forcing excess inventory on dealerships was openly known, but it became intolerable and erupted.

This became an opportunity to change decades-old practices not only in companies but also in local governments. Companies rushed to revise their contracts. Instead of using the terms Gap and Eul, they inserted the names of both parties or used other expressions such as partner companies. Seoul City also eliminated the terms Gap and Eul from all documents and announced measures to innovate the Gap-Eul relationship.

The butterfly effect, a concept from chaos theory, suggests that ‘the flap of a butterfly’s wings can cause a typhoon on the other side of the world.’ President Yoon Suk-yeol’s pledge to implement the Delivery Price Linkage System during his presidential campaign was possible because the pain of Euls kept growing amid soaring raw material prices.

The Korea Federation of SMEs conducts an annual survey on unfair trade damage, and recent results showed that 36.4% of surveyed companies suffered from unfair trade. Among them, six out of ten reported damages related to delivery payments (such as price squeezing, non-payment, and reductions). There were also significant complaints about unfair contracts (such as failure to issue contracts, unfair special clauses, and exclusive transactions) and unilateral contract terminations. Smaller SMEs had more difficulty coping and had to bear the damage.

These problems do not only occur between large corporations and SMEs. According to the Small and Medium Business Administration’s SME Survey, which is used as national statistics, about 30% of domestic SMEs trade with large corporations, while transactions between SMEs account for around 55%, more than half. The remaining 15% trade with general consumers and public institutions.

Statistics show that the Delivery Price Linkage System is not just an issue between large corporations and SMEs. Considering the scale of individual transactions, ripple effects, and social interest, the expansion and legalization of the Delivery Price Linkage System should be led and exemplified between large corporations and SMEs.

However, it should be remembered that an SME, which is an Eul to a large corporation, can be a Gap to another SME. Also, these SMEs are not exempt from such issues, so preparation is necessary.

Kim Min-jin, Director of the Ministry of SMEs and Startups

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