LG Group signed a win-win cooperation agreement with 1st-, 2nd-, and 3rd-tier suppliers on the 6th at LG Science Park in Gangseo-gu, Seoul, committing to operate payment deadlines 3 or more times per month and pay within 10 days after each deadline. The Korea Fair Trade Commission (FTC) announced the agreement aims to extend cooperation benefits beyond 1st-tier suppliers to create a sustainable partnership ecosystem. Seven LG affiliates participated including LG Electronics, LG Display, LG Innotek, LG Chem, LG Energy Solution, LG Household & Health Care, and LG Uplus. FTC Chairman Joo Byung-ki stated that exploitative corporate ecosystems are a major cause of wealth concentration and economic inequality in South Korea.
LG Group Commits to Accelerated Payment Terms for Suppliers
LG Group will operate payment deadlines 3 or more times per month for 1st-tier suppliers and pay within 10 days after each deadline. The company committed to maintaining a 100% cash-equivalent payment ratio and expanding the use of the Ministry of SMEs and Startups' win-win payment system. LG will also increase its win-win payment cascade rate to over 10%, which measures the proportion of payments made to 1st-tier suppliers through the win-win payment system that reach 2nd-tier suppliers. 1st- and 2nd-tier suppliers will similarly work to shorten payment periods, expand cash-equivalent payment ratios, and use win-win payment methods for their own suppliers.
LG Allocates ₩900 Billion to 2nd-Tier and Lower Suppliers
LG Group will newly allocate over ₩900 billion, representing 10% of its total ₩9 trillion co-prosperity fund, to support 2nd-tier and lower suppliers. The company will also expand access to its employee welfare mall to include employees of 2nd-tier and lower suppliers. These measures are designed to ensure that cooperation benefits extend beyond 1st-tier suppliers throughout the supply chain.
LG Establishes Dispute Resolution Mechanism for Subcontract Payments
The seven LG Group affiliates participating in the win-win agreement will establish and operate subcontract payment dispute resolution mechanisms to prevent payment-related conflicts. This institutional framework aims to provide structured channels for addressing payment disputes before they escalate.
FTC Chairman Addresses Economic Inequality Through Corporate Cooperation
FTC Chairman Joo Byung-ki stated that wealth concentration, inequality, and polarization are the most critical obstacles to South Korea's economic development. He identified exploitative corporate ecosystems as a primary cause of these issues. Joo emphasized his hope that the win-win cooperation culture starting with LG and spreading to 1st-, 2nd-, and 3rd-tier suppliers will take root.
FAQ
What did LG Group announce on the 6th regarding supplier payments?
LG Group announced it will operate payment deadlines 3 or more times per month for 1st-tier suppliers and pay within 10 days after each deadline, while maintaining a 100% cash-equivalent payment ratio.
How much funding will LG allocate to 2nd-tier and lower suppliers?
LG Group will allocate over ₩900 billion, representing 10% of its total ₩9 trillion co-prosperity fund, to newly support 2nd-tier and lower suppliers.
