Samsung Could Increase Supplier Aid

The Samsung Group has decided to make all of its affiliates pay their small and medium-sized suppliers in cash instead of by draft.

It is also considering adding more than 100 billion won yearly to the 1.2 trillion won assistance package that it is providing to small and medium-sized suppliers over the next 10 years to raise their technological competitiveness.

All of these are part of Samsung’s “small and medium-sized suppliers’ competitive enhancement measures” that will be finalized by the end of this month, and that will be implemented as early as next month.

According to a Samsung official, Samsung is drawing up measures to seek co-development with its suppliers, which will reflect suppliers’ demands.

Once tens of thousands of Samsung suppliers are paid entirely in cash, their management will be stabilized, which will allow more effort to be spent on increasing technological competitiveness.

Samsung Electronics began paying its small and medium-sized suppliers in cash starting last year. Other Samsung affiliates are currently paying 60 to 70 percent of their settlement prices in cash, and 30 to 40 percent by draft.

In addition, Samsung will invite second-generation owners of its small and medium-sized suppliers to its affiliates to work and receive training. This means Samsung Electronics’ “second generation owners training program,” conducted by since last year, will be expanded to all Samsung affiliates.

One Samsung official said that by letting second-generation owners of small and medium-sized suppliers experience Samsung’s corporate culture, Samsung will be able to foster sound partnerships with its suppliers. It is an attempt to expand Samsung Electronics’ success model.

Meanwhile, ever since Samsung announced it was making an 800 billion won donation to society, the Samsung Community Relations Department has received over a hundred phone calls daily asking about the donation.

Hwang Jung-eun, a general manager at the Samsung community relations department, said it is hard for her office to conduct business due to the flood of phone calls asking for help and citing individual difficult circumstances. She explained that the decision on who will be managing the donation would be referred to public opinion.

Jeong-Hun Park Jae-Young Kim sunshade@donga.com jaykim@donga.com