87% of SMEs Say "Unfair Trade Penalties Should Be Used to Support Affected Companies"

A small and medium-sized manufacturing factory located in Gimpo, Gyeonggi.
Photo by Lee Junhyung

[Asia Economy Reporter Junhyung Lee] Concerns have been raised that support for small and medium-sized enterprises (SMEs) harmed by unfair trade practices is insufficient. There are also opinions that fines imposed on companies committing unfair trade should be used to support the victimized companies.

According to a survey conducted by the Korea Federation of SMEs from October 15 this year to last month on 500 SMEs regarding improvement measures for the unfair trade damage relief system, more than 8 out of 10 SMEs (86.6%) responded that fines collected by the government from unfair trade should be utilized to support the victim companies. Additionally, 79.8% of SMEs expected that creating a support fund using the fines would be helpful to the victim companies.

Degree of smooth relief from unfair trade damage.
[Photo by Korea Federation of SMEs]

Only 2 out of 10 SMEs (18%) believed that support for companies damaged by unfair trade is being carried out smoothly. On the other hand, 42% of companies viewed the relief for unfair trade damage negatively.

Among SMEs, 3 out of 10 (28.4%) cited "fear of retaliation" as the most difficult issue when dealing with unfair trade. This was followed by "lack of damage recovery methods (24.2%)" and "business deterioration due to damage (18.4%)."

The necessity of utilizing support for companies affected by fines and whether support is helpful when assisting companies affected by fines.
[Photo by Korea Federation of SMEs]

Furthermore, 6 out of 10 SMEs (57%) answered that nullifying unreasonable unfair special contracts at the source would help victim companies. 34.2% argued that the current punitive damages ratio, applied up to three times, should be expanded to up to ten times.

Regarding the priorities when providing relief to unfair trade victim companies, the survey showed "adequate compensation for damages (30.8%)", "prompt damage relief (28%)", and "management support for victim companies (25.2%)" in that order.

Yang Chan-hoe, Head of the Innovation Growth Division at the Korea Federation of SMEs, said, "Although various measures have been promoted to prevent unfair trade and sanction offending companies, it is true that discussions on practically supporting victim companies have been insufficient. Institutional improvements are absolutely necessary for prompt and sufficient compensation for damages."