Retailers give gift of early paymentKorea’s large retailers are paying their small and midsize suppliers early to help them through their pre-Chuseok financial crunch.
Lotte Department Store said it will pay 170 billion won ($155.2 million) to 650 suppliers on Sept. 13, 10 days earlier than the due date.
“During the months of Chuseok and the Lunar New Year, we usually pay a day or two earlier. However, this time, we decided to pay 10 days earlier because we understand the financial difficulties small and medium suppliers face,” said a spokesman for Lotte Department Store. “We hope our partners can manage their funds more easily.”
Lotte Group’s discount chain arm Lotte Mart is following suit, paying 72 billion won to its suppliers on Sept. 13.
Moreover, Lotte Mart plans to transfer an additional 40 billion won for purchases and services even earlier on Sept. 10, so that the subcontractors can have a little bit of financial breathing room.
Since 2010, Lotte Mart has prepaid 52 billion won to subcontractors who develop specialized holiday products from other small and medium suppliers or prepare gift sets.
The supermarket chain Lotte Super and the convenience store chain 7-Eleven plan to pay 45 billion won of payment for goods on Sept. 16. The Chuseok holiday this year runs Sept. 18-20.
Shinsegae Group, the nation’s largest retail conglomerate, also said yesterday that its discount arm E-Mart and department store will pay 160 billion won to 4,390 subcontractors earlier than the date due.
E-Mart will pay 83 billion won to 1,390 partners, Shinsegae Department Store 53 billion won to 2,300 subcontractors and Shinsegae I&C 12 billion won to 200 partners.
Shinsegae is making early payments to help out subcontractors and suppliers who are financially squeezed at holiday time, when they must make large cash outlays for bonuses, wages and raw materials.
Since 2008, E-Mart has been paying 1.6 trillion won in advance annually for goods after introducing its “payment in 100 percent cash system” to help smooth financing for subcontractors.
As a result, thanks to the 100 percent cash payment system, the company estimates the annual savings to suppliers at 6 billion won.
Shinsegae Department Store will also pay suppliers on Sept. 13 and 17, instead of the original payment dates of Sept. 15 and 20.
“If we pay the delivery charge in advance of the schedule, it will help ease the burden for small and medium suppliers considerably,” said a spokesman for Shinsegae Group. “We will continue to strive to come up with measures that can accomplish shared-growth of large and small companies.”
BY KIM JUNG-YOON [firstname.lastname@example.org]
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