Home plus accused of abusing suppliers

By Park Si-soo

Home plus has drawn public criticism for allegedly abusing its suppliers.

The retailer has for years promoted itself as a responsible corporate citizen and carried out campaigns for better business environment, winning a sustainable management award in 2013.

However, a large number of its suppliers have been found to have suffered from unfair practices and overbearing attitude, often inflicting significant financial damage to them.

A domestic shoemaker filed a complaint with the Fair Trade Commission (FTC) last month, calling on the regulator to stop Home plus’s power abuses. The shoemaker’s CEO claimed the retailer’s unfair practices have taken a big toll on his firm’s bottom line, adding that he fears his company will now face reprisals by the retailer in the wake of the complaint.

“I was forced to pay the salary of 100 people working for Home plus,” Jeon Jin-woo, the shoemaker’s CEO, said in a SBS TV report, Sunday. He claimed that he was pressed to hire 100 employees and send them to work for Home plus, which is illegal.

“I was forced to do so. I had to hire 100 people for Home plus without any contract with the company,” he said. “They worked for Home plus and I paid their salaries.”

A Home plus spokesman insisted that the controversial arrangement was made with the mutual agreement of the two sides, and not coerced.

In addition to this, Jeon said the retailer had ignored a contract term regarding product returns, arguing that it returned shoes worth a whopping 1.5 billion won ($1.39 million) for three years from 2007.

“Our contract with Home plus does not allow the arbitrary return of products. But the company still did, using its position in the strict market hierarchy,” he said.

The Home plus spokesman denied such allegations, claiming this was also done under a mutual agreement.

The shoemaker’s head also claimed that Home plus put pressure on him to buy a large number of gift vouchers it had issued ahead of traditional holidays

Home plus officials admitted that some of these issues had occurred, but said the problems with the shoemaker were the result of some “overly enthusiastic” sales managers, denying the involvement of the firm’s higher-ups.

Home plus, which is owned by U.K-based retail giant Tesco, said it paid 1.3 billion won in compensation last year to the shoemaker for any financial losses sustained as a result of the “mistakes” they described.

The FTC will soon launch an investigation into the case.

Meanwhile, Home plus’s former and incumbent executives, including former Chairman Lee Seung-han and incumbent President Do Sung-hwan, were recently quizzed by prosecutors over allegations they aided the selling of customers' personal data to insurance firms.

Home plus allegedly sold the personal information of some 9 million clients to 10 insurance companies over the past five years.