E-mart, Lotte Mart to provide loans to suppliers at low interest rates
Fair Trade Commission Chairman Kim Sang-jo, third from left, speaks at a meeting with executives of the country's top retailers held at the Korea Federation of SMEs on Yeouido, Seoul, Friday. Businesses unveiled their plans for mutual growth with small suppliers at the meeting. / Yonhap
By Yoon Ja-young
Retailer E-mart will set up a 141.8 billion won fund to provide low-interest loans to its suppliers. Home plus will establish a sales channel for the startups of young entrepreneurs and Lotte Department Store will provide a special training program for employees of small and medium enterprises (SMEs).
These are among plans announced by the country's top retailers for mutual growth with small suppliers.
The plans were unveiled at a meeting between retail industry executives and Fair Trade Commission (FTC) Chairman Kim Sang-jo Friday.
Kim noted the retail market is facing unprecedented fierce competition, with the demolition of borders between countries or between online and offline channels, coupled with innovative changes triggered by technologies of the Fourth Industrial Revolution -- artificial intelligence (AI) and virtual reality (VR).
“There won't be an absolutely dominating player in this market anymore,” Kim said. “There will only be leaders and losers instead, and today's leaders can become tomorrow's losers, anytime.”
He said to be a leader in this game it is crucial to supply good products that satisfy consumers' needs.
“If retailers want to provide good products to consumers, their suppliers should also be competitive,” Kim said. “Their innovation through R&D and investment is essential. But it will be only possible when the suppliers get enough compensation for their efforts.”
He said if suppliers are not given their due stake, it will eventually dampen the competitive edge of retailers.
“Mutual growth of retailers and suppliers, as well as fair distribution of fruits with suppliers, are thus essential for survival of the retailers themselves,” Kim said.
The retailers suggested setting aside funds to provide loans at low interest rates. E-mart plans to set up a 141.8 billion won fund for suppliers, on top of developing products with SMEs. It also suggested supporting SMEs to open up sales channels abroad, targeting 50 billion won in exports this year.
Home plus and Lotte Mart said they will provide a sales channel for startups launched by young entrepreneurs. Home plus opened doors to local beer makers at its 142 stores around the country, and it plans to expand the program to traditional liquor. Lotte Mart said it would use online platforms to gather ideas and jointly develop products with SMEs.
Department stores also presented support programs for suppliers. Lotte Department Store will set up a 205 billion won fund to provide low-interest-rate loans to suppliers and it plans to operate stores that exclusively sell products of SMEs. It will provide a training program for employees of small suppliers to help them develop expertise in online sales, package design and sales. AK Plaza is planning a similar program.
Shinsegae Department Store suggested the “S Partners” program, in which it will search for competitive SMEs and support them to launch their products through Shinsegae. Hyundai Department Store, meanwhile, said it will help SMEs participate in expos overseas so they can meet new buyers.
TV home-shopping companies also plan to help SMEs advance into overseas markets. GS Home Shopping said it will introduce the products of SMEs through its channels overseas. Hyundai Home Shopping is scheduled to subsidize SMEs' sales expenses abroad. CJ O Shopping said it will introduce products of excellent SMEs through its channel without commission.
Online shopping mall Interpark, meanwhile, presented plans to support the online marketing of small suppliers.
The FTC chairman praised the retailers' efforts for mutual growth.
“I think other businesses also should understand the value of mutual growth and join the move,” Kim said. “The efforts should expand to joint product development and sharing of knowhow in management and technology.”
He also stressed mutual growth with mom-and-pop stores.
“When considering that the self-employed account for 21.2 percent in Korea, which is the highest among Organization for Economic Cooperation and Development (OECD) member countries, improving their income through mutual growth plans will be a crucial foundation for the income-led growth strategy,” Kim said.
Income-led economic growth is the key strategy of the Moon Jae-in administration. Unlike previous administrations, which sought economic growth through conglomerates on expectation of the “trickle-down effect,” the current administration is focusing on increasing the income of the working class so their consumption boosts the economy.
The FTC chairman said shopping malls and outlets will also soon be subject to the regulation on retailers to shoulder promotion costs with suppliers. The FTC previously penalized local retail giants as they pressured suppliers to pay for all promotion costs. They sometimes demanded suppliers send their employees to their stores to help them, but did not pay them.