Business Community Increases Scale of Early Payment for Partner Company Deliveries Ahead of Lunar New Year

24.2% Increase Compared to Last Year

[Asia Economy Reporter Kim Pyeonghwa] Despite the economic downturn, major conglomerates such as Samsung, SK, Hyundai Motor, LG, Lotte, and POSCO have decided to increase the scale of early payment for subcontracting and supply payments by 24.2% compared to the previous year to alleviate the financial difficulties of their partners ahead of the Lunar New Year holiday.

The Korea Federation of SMEs Cooperation Center announced in its report titled '2023 Survey on Early Payment of Subcontracting and Supply Payments by Major Companies before Lunar New Year' that the total amount of supply payments to be paid to partner companies by major companies before the Lunar New Year this year is 7.7 trillion KRW as of the 16th. This is an increase of 24.2% compared to last year (6.2 trillion KRW).

The Federation of SMEs Cooperation Center stated that recent high interest rates, high exchange rates, and high inflation, along with the payment of bonuses before the Lunar New Year, have put significant financial pressure on small and medium-sized enterprises (SMEs). They added that the increase in early payment amounts by large companies is expected to ease the financial strain on their partner companies.

[Photo by Jeongyeongryeon]

Major domestic companies are also engaging in various support activities for the development of their partner companies and local communities. Seventeen affiliates, including Samsung Electronics, operate an online marketplace for agricultural, marine products, and processed foods targeting employees ahead of the Lunar New Year, supporting the expansion of sales channels for 49 partner SMEs and revitalizing the domestic economy.

SK Innovation, an affiliate of SK Group, plans to deliver a mutual growth fund of 3.6 billion KRW to about 7,000 members of partner companies ahead of the Lunar New Year. SK Incheon Petrochem will deliver holiday gifts to about 700 low-income households in six neighborhoods near its business site.

Hyundai Motor Group will provide 9.5 billion KRW worth of Onnuri gift certificates to employees to help revitalize traditional markets and stimulate domestic consumption. They are also preparing a ‘Lunar New Year Special Free Inspection Service’ at nationwide service centers to ensure consumers’ safe travel during the holiday.

LG Group, centered on its core affiliates, delivers daily necessities and food items to underprivileged neighbors in the community. LG Electronics prepares school supplies and Lunar New Year foods to deliver to children with disabilities at Amsa Rehabilitation Center, while LG Chem and LG Display donate holiday gifts and food items to local residents and elderly welfare facilities.

CJ CheilJedang offers partner companies and their employees an additional 5-10% discount on gift purchases and provides gift certificates worth up to 1.5 million KRW. Naver distributes holiday gift sets to about 900 partner company employees residing at its headquarters and affiliate business sites.

Major companies such as Lotte, Hanwha, GS, and Hyundai Heavy Industries operate win-win cooperation funds and win-win payment systems to support smooth financial operations of partner companies and reduce their financial burden. POSCO strengthened supply chain management by pre-purchasing raw materials and providing export and emergency financial support to local partner companies that suffered direct and indirect damage from Typhoon Hinnamnor last year.

Park Cheolhan, head of the Federation of SMEs Cooperation Center, said, “We hope that the warmth of co-growth from large companies to their partners will spread to second- and third-tier partners as well, and that a culture of early payment to medium and small enterprises will expand so that all companies can have a prosperous Lunar New Year holiday.”

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