Fair Trade Commission signs cooperation pact with Samsung and its suppliers

Energy and labor cost changes to be reflected proactively in payment terms

Financial and technology support strengthened for 6,700 suppliers

Incentives expanded for companies that fulfill pact commitments

Samsung Group is expanding its supplier cooperation program beyond tier-1 partners to include tier-2 and tier-3 suppliers.

The group plans to improve payment terms for suppliers, extend financial and technology support through a 3.5 trillion won ($2.27 billion) mutual-growth fund and an environmental, social and governance fund, and proactively reflect fluctuations in energy and labor costs in supply prices.

Employees arrive for work at Samsung Electronics' Seocho office building in Seoul. [Yonhap]
Employees arrive for work at Samsung Electronics' Seocho office building in Seoul. [Yonhap]

The Korea Fair Trade Commission said Monday that its chairman, Ju Byung-ki, presided over a mutual-growth agreement signing ceremony at Samsung Electronics' Digital City campus in Suwon, Gyeonggi Province, bringing together 12 Samsung Group affiliates and their tier-1, tier-2 and tier-3 suppliers.

Participants included Samsung Electronics, Samsung Display, Samsung SDI, Samsung Electro-Mechanics, Samsung SDS, Samsung Heavy Industries, Samsung E&A, the construction and fashion divisions of Samsung C&T, Hotel Shilla, Cheil Worldwide and Semes.

The agreement is designed to ensure Samsung's supplier cooperation policy reaches beyond tier-1 partners to tier-2 and tier-3 suppliers further down the supply chain. Its main pillars are improved payment terms and expanded financial and technology support.

Under the pact, Samsung will pay tier-1 suppliers within 10 days of each billing deadline — well ahead of the legally required 60-day limit — and will maintain cash-equivalent settlement and the mutual-payment system as standard practice. Holiday payments will also be made early. Tier-1 and tier-2 suppliers, in turn, committed to shortening payment deadlines for their own downstream partners to within 30 days of billing and to expanding the use of cash-equivalent settlement and the mutual-payment system.

Suppliers that join the improved payment terms initiative will receive incentives including bonus points and rating upgrades in Samsung's comprehensive supplier evaluations, expanded access to the mutual-growth fund, and recognition through an outstanding-supplier award.

Support for suppliers will also be broadened. Samsung will operate the 3.5 trillion won mutual-growth and ESG funds to back facility investment, technology development and ESG transition. Samsung Electronics will also incorporate into the agreement its plan — announced in May — to support tier-2 and tier-3 suppliers and establish an industrial accident fund, part of a 5 trillion won social-contribution initiative the company unveiled earlier.

Samsung additionally plans to proactively reflect changes in energy and labor costs in supply prices, even though such costs are not currently covered under the subcontracting price-linkage system, and to provide environmental and safety management consulting to tier-2 and tier-3 suppliers.

The Fair Trade Commission expects about 6,700 suppliers within Samsung's supply chain to benefit from the agreement. Samsung said it will incorporate the pact's terms into its fair-trade agreement, which is renewed in early 2027, to ensure continued compliance.

"The paradigm of global competition has completely shifted — from contests between individual companies to rivalry between industrial ecosystems," Chairman Ju said. "The national economy must focus more on fair growth driven by innovation and mutual prosperity, not exploitative misconduct."

He added that the competitiveness of an industrial ecosystem is directly tied to the strength of the suppliers within large companies' supply chains, making cooperation between large companies and their suppliers "no longer a choice, but an essential condition for the sustained growth of our economy."

"This agreement will open a channel for Samsung's success to flow freely to its small and medium-sized suppliers, creating a virtuous cycle," Ju said. "The Fair Trade Commission will provide firm backing so that the efforts of Samsung and its suppliers bear fruit."

The commission said it will offer incentives to companies that faithfully fulfill the agreement — including bonus points in future fair-trade compliance evaluations and recognition as a model subcontracting company for small and medium-sized enterprises — and will actively encourage the spread of similar cooperation agreements between large companies and their suppliers.


y2k@heraldcorp.com