A panel on shared growth of large and small businesses agreed Thursday to adopt a new system to give extra points to companies that share benefits with their suppliers starting next year.
The panel, headed by former Prime Minister Chung Un-chan, grades large enterprises based on their support of smaller partner companies so that those with higher marks get more government incentives and have an advantage in winning public orders.
The nation’s largest businesses had locked horns with Chung over his proposal to make them share profits exceeding their targets with suppliers.
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Chung Un-chan |
A much watered-down version named “cooperation benefit sharing” was introduced at the panel meeting on Thursday to be voluntarily adopted by conglomerates, Chung said in a press briefing.
Under the new system, large firms can choose to share profits reaped through cooperation with suppliers based on prior bilateral agreements.
As it is not mandatory, it does not appear much different from the “benefit sharing” programs already being carried out by some companies.
The Commission on Shared Growth for Large Corporations and Small and Medium Enterprises said it will look into large companies’ adjustment of prices paid for suppliers’ products depending on the fluctuation of raw material prices, possible unfair price cuts and liquidity support for partner firms.
The panel also agreed to organize an arbitration committee to mediate conflicts over large companies’ scouting for people from small firms.
The conglomerates agreed to refrain from taking away smaller companies’ staff, and when they can’t avoid hiring from suppliers, to help the firms find new employees.
The Federation of Korean Industries, a business lobby representing the nation’s largest companies, had refused to attend the panel’s regular meetings in December and January in protest of the idea that conglomerates should share profits beyond their targets.
The FKI claimed that the panel was forcing profit-sharing. The commission consists of nine representatives of large and small companies each, four professors, two think tank heads and Chung, former president of Seoul National University.
In addition to rating companies based on their efforts for mutual growth with partner firms, the panel, launched a year ago, selects business areas that should be left for only small and medium-sized companies. President Lee Myung-bak named Chung as head of the panel.
By Kim So-hyun (
sophie@heraldcorp.com)
