Slight Decline in Fairness Index of SME Transactions... Improvement Needed in Some Industries

SME Central Association Announces 2023 Survey Results on Fairness Levels in Subcontracting Transactions for Small and Medium Enterprises

This year, the perceived level of fairness among small and medium-sized enterprises (SMEs) has been found to be slightly lower compared to last year. The Korea Federation of SMEs (Chairman Kim Ki-moon) announced the results of the "2023 SME Subcontracting Transaction Fairness Level Survey," conducted on 350 SMEs, on the 26th.

The survey targeted industries with a high proportion of manufacturing subcontracting SMEs. The Transaction Fairness Index, calculated based on this survey, was developed by the Korea Federation of SMEs in 2021 to quantitatively measure and analyze the level of fairness perceived by SMEs in subcontracting transactions. However, this survey was conducted based on subcontracting transactions in 2022, so the effects of measures implemented this year, such as the delivery payment linkage system, were not reflected.

According to the survey results, this year’s Transaction Fairness Index was 77.24, which is 1.18 points lower than the previous year. By industry, the index slightly increased in the rubber/plastics, non-metallic, and other sectors, while it declined in the metal/steel, automobile, other machinery/equipment & transportation equipment, and electronic components/electrical equipment/medical sectors.

When the Transaction Fairness Index was analyzed in detail by contract stages across industries, the other machinery/equipment & transportation equipment sector showed relatively large declines in the contract/price negotiation, delivery conditions, payment, and perceived fairness areas. In the automobile sector, the fairness levels in contract/price negotiation and payment areas deteriorated.

Yang Chan-hoe, Head of the Innovation Growth Division at the Korea Federation of SMEs, stated, "The survey results suggest that some industries need to make efforts to improve fairness in contract/price negotiation and payment areas." He added, "It is presumed that the results were influenced by the economic crisis situation in 2022, which was marked by the so-called triple shocks of high inflation, high exchange rates, and high interest rates."

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