Korea’s biggest builder expands low-interest loans and technology development for subcontractors
Hyundai Engineering & Construction, Korea’s largest builder, is expanding its campaigns to prop up smaller partners and suppliers as it strives to build a level playing field in Asia’s fourth-largest economy.
Co-prosperity has been a keyword for corporate management over the past year as the government pushes for fair trade and healthy competition between conglomerates and small and medium businesses.
Hyundai E&C said it has introduced measures to support its partner firms for overseas expansion, technology development and other services.
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Officials of Hyundai Engineering & Construction and its subcontractors pose at the construction site for a port in the United Arab Emirates in January. (Hyundai E&C) |
With its subsidies, nearly 40 companies since last year were able to make on-site inspections in the United Arab Emirates, Saudi Arabia, Qatar and Kuwait, where Hyundai is working on eight projects for power plants, ports, gas treatment and nuclear reactors.
During the tours, employees from the partner firms were briefed on the ongoing project, risks in the local market and latest trends in engineering, plant and atomic power, a Hyundai official said.
“We’ve been having difficulties preparing to expand abroad due to a lack of information. But the Middle East tour provided us with practical support because I could get a good grasp of the construction market there and other useful information,” said an executive at Kichang Construction Co., a Hyundai supplier.
As part of efforts to facilitate financing for small vendors, Hyundai created a “mutual growth” fund last year worth 20 billion won ($17.1 million), which lends at low interest rates. The builder added 8 billion won last May to expand the initiative.
Aside from the fund, the company said it has been helping partners boost liquidity by making advance payments and lending money to cash-strapped suppliers at a zero interest rates.
Hyundai said it voluntarily increased prices of supplies for its small- and mid-size subsidiaries early this year to share their burden of a volatile currency, inflation and surging costs of raw materials.
To nurture promising partners and bolster collaboration, the builder has been hosting technology competitions since 2008 for all SMEs. Winners receive subsidies on technology improvement and intellectual property rights.
As a result, Hyundai earned a “good” mark in the Fair Trade Commission’s recent assessment of mutual growth on the country’s 56 largest corporations.
The evaluation was driven by the Commission of Shared Growth for Large and Small Companies, which crafted a “mutual growth index” early this year to grade the businesses on how well they distribute their wealth with suppliers.
The initiative came on the heels of simmering criticism that industry giants stifle the growth of their subcontractors and disable sound competition in the market by forcing price cuts on suppliers and granting lucrative orders to their own affiliates.
The FTC also carries out investigations to see whether companies are engaged in antitrust practices and other irregularities.
“The company has been striving to communicate with subcontractors through a variety of programs. We’ll focus on overseas expansion for superior partners, who could not conceive the idea due to financial difficulties and inexperience,” a Hyundai spokesperson said.
By Shin Hyon-hee (
heeshin@heraldcorp.com)
