[The Editors' Verdict]If You Truly Want Businesses to Succeed

There is no error in the saying that a country prospers when its businesses do well. It is also hard to refute the opinion that we should not create a country where only large corporations thrive. Groups that mainly focus on the former value often fall into a narrow-minded (sometimes intentional) belief that it is difficult to pursue the latter value simultaneously, and it is acknowledged that conservative media, especially economic newspapers, generally exhibit this tendency.

While public attention was focused on the Cargo Solidarity strike, an important law quietly passed through the National Assembly. The Delivery Price Linkage System, which small and medium-sized enterprises (SMEs) have been advocating for 14 years (and which conservative media and large corporations have opposed for 14 years), stipulates that if the price of raw materials rises after two companies sign a delivery contract, the delivery price should be increased accordingly. Until now, the relatively weaker delivery companies, mostly SMEs, have borne the burden of rising costs.

Both supporters and opponents of this change have clear logic and justification. However, the reason this law’s passage was not treated as major news is closely related to the aforementioned situation. The voices that are heard mostly emphasize the ‘side effects’ from the perspective of large corporations. Regardless of the social consensus on co-growth and coexistence between large and small businesses, groups focusing on these values are sometimes stigmatized as anti-business or anti-national.

Of course, this law has its flaws. The proviso that if the consignor and consignee agree, the raw material price does not have to be linked to the delivery price can nullify the law’s purpose. Although the law was created to protect the weaker party, if the consignor is a small company or the delivery amount is less than 100 million won, it is excluded from the scope. The SMEs’ demand that this law also apply to contracts with public institutions, not just private transactions, has not been codified.

Conversely, the large corporations’ demand that delivery prices should be lowered if raw material prices fall is also reasonable. Since this conflicts with the Subcontracting Act, which defines such ‘reduction claims’ as illegal, detailed guidelines need to be established to allow reduction claims if the delivery price linkage is agreed upon. Because delivery prices automatically rise when costs increase, SMEs have less incentive to innovate and reduce production costs.

Thus, future discussions should focus on refining the system to be more robust and sophisticated. At this point, it is undesirable to merely repeat arguments such as the ‘principle of freedom of contract’ or ‘distortion of the free market.’ The fact that Samsung or Hyundai Motor Company already operate similar systems with SMEs shows that the value of coexistence this law aims for is by no means unrealistic.

There is no doubt that a strong SME ecosystem is a driving force for national economic development. The assessment that we reached the ranks of advanced countries thanks to the innovation of top-tier large corporations was not wrong either.

When the government or civil society risks restricting such important free business activities, it is easy to build a critical argument based on the proposition that ‘businesses must do well.’ We are accustomed to thinking from the perspective of businesses, and the belief that this aligns with values of freedom, competition, efficiency, and democracy becomes a convenient attitude in many ways. But should the businesses we develop for national economic growth be only large corporations, or should SMEs be included as well? Although this is a foolish question, reality constantly demands that we clearly take one side.

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