Abuses by conglomerates in the course of transactions with subcontractors is one of the chronic diseases of our economy. The Fair Trade Commission (FTC) has done a study of outsourcing in "system integration" (SI), a relatively new industry, and surely enough jaebeol subsidiaries like LG CNS and Samsung CNS were found to have violated fair trade laws thousands of times over.
There are countless cases where conglomerates decided on their own to not pay the whole amount owed their subcontractors, or to be late on payments and then not pay anything in interest. It turns out that conglomerates commonly make their subcontractors draft the paperwork needed for the conglomerates to win contracts. SI is about building information systems for the work of government and business, and it is intensive since it involves the latest technology and solutions, meaning drafting proposals involves a lot of money and personnel. If the conglomerate wins the contract the subcontractor fortunately gets orders to fill, but if a contract is not won it is the subcontractor who gets left having to assume the expenses. Numerous small and mid-sized companies have joined the industry, and you can see how conglomerates cut away at their dreams.
There has been no end to the abuses of conglomerates in other industries as well, despite many FTC inquiries. Mid-sized companies cannot grow in such a situation, and the Korean economy will continue to be dominated by the jaebeol. The FTC should stop ritualistically repeating the same process of inquiry and then sanction, and it needs to approach the issue determined that it is going to uproot the problem permanently. Its lack of personnel is not the source of all its problems. The FTC needs to consider "choice and concentration," moving personnel from other department to focus on the problem until progress is made would be another idea worth considering.
The Hankyoreh, 23 August 2005.
[Translations by Seoul Selection (PMS)]
[Editorial] Abuse of Subcontractors Continues |
