Conglomerates to pay suppliers ahead of Lunar New Year

[Courtesy of Samsung, LG, and Hyundai Motor]

Leading South Korean conglomerates, including Samsung, LG, and Hyundai Motor, are taking proactive measures to promote collaborative management with their respective suppliers by making early payments ahead of the Lunar New Year holiday.

Samsung Group said on Monday it will make early payments to its partner companies and operate an ‘online marketplace’ for its employees to help promote sales of local producers. The early payment for goods and services to the supplier network by Samsung Group companies amounts to 2.14 trillion won ($1.6 billion), more than double the support provided before the 2023 Lunar New Year.

Eleven affiliated companies, including Samsung Display, Samsung Electro-Mechanics, Samsung SDI, Samsung SDS, Samsung Biologics, Samsung Bioepis, Samsung C&T, Samsung Engineering, Cheil Worldwide, and Welstory, are participating in the initiative, and each company plans to provide payments up to 21 days earlier than scheduled.

Samsung Electronics and other key subsidiaries within Samsung Group have been supporting the smooth cash flow of their partner companies by increasing the payment frequency for goods and services from the previous twice a month to three to four times a month since 2011. Samsung has also proactively introduced a system since 2018 where increases in labor costs due to minimum wage hikes are reflected in the supply unit prices, aiming to support partner companies and alleviate their financial difficulties.

A total of 17 Samsung affiliates, including Samsung Electronics, Samsung C&T, and Samsung Life, also launched an online marketplace for their employees, offering products such as nationally produced agricultural specialties and supporting small and medium-sized enterprises with smart factory development. Over 7 billion won worth of products were purchased during the Lunar New Year and Chuseok holidays in 2023.

Hyundai Motor Group also revealed its plan to expedite payments, bringing forward the disbursement of 2.14 trillion won in supplier payments by up to 23 days to ease the financial burden on its partner companies. The early payment initiative targets around 6,000 suppliers providing components, raw materials, and consumables to Hyundai Motor, Kia, Hyundai Mobis, Hyundai E&C, Hyundai Steel, Hyundai Autoever, and Hyundai Wia.

For its part, LG also announced its decision to accelerate payments worth nearly 1.2 trillion won to its suppliers and local communities, up to a maximum of 14 days ahead of schedule.

Eight LG affiliates – LG Electronics, LG Display, LG Innotek, LG Chem, LG Energy Solution, LG Household & Health Care, LG Uplus, and LG CNS – are collectively planning to disburse around 1.25 trillion won in early payments to their supplier network. In addition to the early payment scheme, LG Group operates a financial support program with a total fund size of 1.3 trillion won, including a mutual cooperation fund and direct loans, to assist supplier companies in securing funds at low-interest rates.