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Chaebol treatment of SMEs mixed

Korea’s conglomerates showed better and fairer partnership and cooperation with small and midsize enterprises (SMEs) in the construction and retail distribution sectors, but did not do as well in TV home shopping, a report by a private watchdog showed Tuesday.

The Korean Commission for Corporate Partnership announced the results for a review of the country’s 132 conglomerates to assess their business partnership activities with SMEs in 2014.

The commission looked at whether conglomerates adhered to the Fair Transactions in Subcontracting Act, a law enacted by the Park Geun-hye administration that prohibits unfair business transactions between conglomerates and SMEs, such as demanding unfairly low prices for SME products or arbitrarily canceling orders.

The survey considered SMEs in electronics, distribution, construction and five other industries.

The Fair Trade Commission (FTC) cooperated in the review.

A total of 19 conglomerates were given the highest grade of excellent, including Kia Motors, Samsung Electronics, Posco, Hyundai Motor, LG Display, SK Telecom and Coway.

Fourteen were assessed as normal, the lowest of four grades. They included Lotte Home Shopping, Eland Retail, 3M South Korea, Dongbu Steel, Ministop Korea, Ottogi and CJ Mall.

The average score of the conglomerates in terms of “win-win cooperation” with SMEs was 79.4 points, up 3.5 points from 2013.

This year, construction and retail distribution companies received better grades than in 2013. In distribution, GS Retail and Shinsegae Department Store, rose from good to great, the second-highest grade. Nine conglomerates, including Lotte Department Store, were graded as good.

For the first time in the construction industry, SK E&C received the highest grade of excellent, the commission said.

On the other hand, the TV home shopping sector showed deterioration in its interactions with SMEs. CJ O Shopping and Lotte Home Shopping dropped from good to normal. The average score of conglomerates fell 1.2 points.

“They dropped because of their bribery scandals involving SMEs last year,” said Shin Yeong-seon of the FTC.

Shin Heon, former president of Lotte Home Shopping, has been accused of taking bribes from some SMEs in return for being given preference in selling or advertising their products. In June, Shin was sentenced to two years in jail and is serving four year’s probation.

BY KIM HEE-JIN [kim.heejin@joongang.co.kr]