LG expands support for subcontractors
Cho Suk-jae, third from left, LG Chem president, shakes hands with the Industrial Bank of Korea CEO Cho Joon-hee after they agreed to launch a 200 billion-won fund to help its subcontractors at LG’s headquarters in Yeouido, Tuesday. / Courtesy of LG Group
By Kim Yoo-chul
LG Group said Tuesday it will expand its financial support for subcontractors by investing 200 billion won to launch a fund for mutual growth with small- and medium-sized enterprises (SMEs).
``The group’s four affiliates including LG Electronics, LG Chem, LG Display and LG Life Sciences joined hands to create a new fund for shared growth with LG’s local suppliers,’’ said group spokesman Jeong Jung-wook, Tuesday.
The Industrial Bank of Korea (IBK) will manage the fund. Jeong said the creation of the fund was aimed at helping LG’s second- and third-tier suppliers.
In cooperation with the state-run bank, LG launched its first mutual growth fund worth 340 billion won in September 2010 to support its top-tier subcontractors.
In a statement, the group said some 500 second- and third-tier suppliers for the group’s four affiliates could borrow money from the fund.
``Subcontractors can borrow money at lower interest rates. It will take only three days to take out loans,’’ Jeong said.
The group will also dispatch LG technicians to those partners to help them utilize advanced technologies to cut administrative costs and to share patents with the group in new business areas in which group affiliates are involved.
LG will also hold its own job fair for subcontractors, though the spokesman declined to elaborate further.
Since early this year, LG Chairman Koo Bon-moo has consistently stressed the importance of shared growth. In February, the chairman summoned 2,000 LG officials to a special session on fair trade with its local suppliers.
The nation’s conglomerates have been credited with driving Korea’s economic growth over three decades by spearheading exports.
However, critics accuse them of hurting smaller companies and widening the income disparity gap through their market domination and concentration of wealth.
Through mutual growth efforts, LG is seeing a mild recovery in its television, display and smartphone businesses, according to LG officials.
The group’s most-crucial unit of LG Electronics has succeeded in commercializing a 55-inch OLED TV for the first time in the world.
``LG will give more business opportunities to SMEs. Some say bright days have gone to major Japanese consumer electronics companies. For the short term, that may be. But Japan still has huge leverage in patents in various fields as the country maintains very solid partner-support systems,’’ said Jeong.