Samsung to Advance Payment of 1.3 Trillion KRW to Partners... Boosting Domestic Demand Ahead of Lunar New Year

[Asia Economy Reporter Kim Hyewon] Samsung Group announced on the 27th that it plans to make early payments totaling 1.3 trillion KRW for goods from partner companies ahead of the Lunar New Year holiday.

The early payment of goods will begin with Samsung Electronics on the 8th of next month and will be carried out by each affiliate. Samsung’s partner companies will be able to receive payments for goods 1 to 7 days earlier than usual, and in some cases up to 2 weeks earlier, allowing them to utilize the funds sooner.

The early payment of goods involves a total of 11 affiliates including Samsung Electronics, Samsung Display, Samsung Electro-Mechanics, Samsung SDI, Samsung SDS, Samsung Biologics, Samsung Bioepis, Samsung C&T Corporation, Samsung Engineering, Cheil Worldwide, and Wellstory.

Since 2005, Samsung Electronics has been the first domestic company to pay partner companies in full cash to enable them to focus on technology development without concerns about liquidity. Since 2011, the payment cycle for goods has been increased from twice a month to four times a month.

Samsung Electronics employees are browsing products at the 'Seollal Online Market'.

Samsung will also operate semiconductor partner incentives and an 'Online Market for Lunar New Year' for employees, in addition to early payments for partner companies, to ease the financial burden on small and medium-sized partners and to revitalize the domestic economy, which has been struggling due to COVID-19.

Samsung Electronics paid incentives totaling 41.19 billion KRW in the second half of 2020 to 289 semiconductor partner companies and 23,000 employees. Including the 36.53 billion KRW incentive paid in July last year for the first half, a total of 77.72 billion KRW in partner incentives was paid over the past year. Since the system was introduced in 2010, a total of 425.4 billion KRW has been paid over 11 years.

The semiconductor partner incentive system was introduced by Samsung Electronics as part of its co-prosperity efforts with semiconductor partners, and incentives are paid twice a year to partners who achieve 'productivity' and 'safety' goals. Since the second half of 2018, the payment target has been expanded to include not only first-tier but also second-tier partners. Samsung Display also paid 5.7 billion KRW in incentives for the second half of 2020 to 45 partner companies.

All 19 affiliates, including Samsung Electronics, Samsung C&T Corporation, and Samsung Life Insurance, will open an online direct transaction market from the 22nd of last month until the 10th of next month in celebration of the Lunar New Year. The purpose is to help farmers and fishermen struggling due to COVID-19 and to contribute to revitalizing the domestic economy.

Samsung has operated online and offline direct transaction markets during past holidays, but since last Chuseok, it has operated only online to help prevent the spread of COVID-19.

Through the online direct transaction market, employees can purchase specialty products from sister villages, agricultural and marine products from villages cooperating with the Rural Development Administration, and products from companies supported by smart factory initiatives at discounted prices.