On Thursday the Fair Trade Commission (FTC) issued warnings to Doosan Infracore, LG Chemical, and a total of four companies for unfair trade practices with their subcontractors. It is sad that the high-handed behavior of conglomerates towards mid-sized suppliers. At this point it's frustrating to have to watch the FTC and conglomerates playing hide-and-seek.
Unfair transactions with subcontractors are cited as one of the main reasons for economic disparity. When conglomerates are doing well the warmth does not spread to the small companies they deal with. They choose subcontractors by having them bid for contracts but they unit prices even more and leave them with the burden of paying the difference when things like the cost of raw materials go up. Much of the business performance of conglomerates is achieved on top of the sacrifices of their suppliers. A recent report by the Korea Labor Institute detailing information designed to prevent wrongful price-cutting in subcontracting transactions shows you exactly what the problem is. If you say that the average wage for the people working for conglomerates involved in automobile production and electronics between 1996 and 2002 was 100, the average wage at mid-sized parts suppliers fell from 60 to 40 percent of that. Conglomerates' net profits compared to sales rose significantly for 2001 to 2003 while unit prices have fallen every year. Countless numbers of suppliers are in the red as a result.
Mid-sized companies are the roots and sprouts of the economy but they cannot survive like this. It is self-evident that conglomerates cannot maintain international competitiveness over the long run without mid-sized companies producing good parts and materials. There will always be limits to what the FTC can do, no matter what it does, without a change of attitude by jaebeol tycoons and other executives at conglomerates. We call on them to lead the way for their partners in competition for the future of the nation and in the international market, instead of just talking the talk about mutual prosperity,
The Hankyoreh, 8 September 2005.
[Translations by Seoul Selection (PMS)]
[Editorial] Conglomerates Must Act on 'Mutual Prosperity' |
