[Asia Economy Reporter Jeong Hyunjin] LG Electronics announced on the 6th that it has been selected as a model case for contributing to improving the cash flow of its partners through win-win payment and expanding win-win payment to secondary partners.
The Fair Trade Commission, Ministry of SMEs and Startups, Ministry of Employment and Labor, and five other related government departments held the "Fair Economy Performance Report Meeting" at the annex of the Government Seoul Office on the same day, introducing companies that showed excellent performance in win-win payment, open orders, and technical support. LG Electronics presented a case of improving the payment environment up to secondary partners, and Taeyang SCR, a secondary partner of LG Electronics, introduced a case of securing cash flow and enhancing management stability by receiving payment for goods from the primary partner through win-win payment.
Win-win payment aims to support the payment of goods from large corporations to primary partners to be extended to secondary and lower-tier partners. When a large corporation deposits the payment for goods into a dedicated account at a financial institution, the payment is made to secondary and lower-tier partners on the payment date. This system guarantees that partners receive cash on the payment date, and secondary and lower-tier partners can early monetize the payment for goods based on the credit of the large corporation before the payment date.
Last year, LG Electronics paid 7.1484 trillion KRW to primary partners through win-win payment. Among this, 531.4 billion KRW was paid to secondary partners, recording the highest win-win payment spillover rate of 7.4% among domestic large corporations. The spillover rate refers to the ratio of payments made by large corporations to primary partners that are passed on to secondary and lower-tier partners. LG Electronics expects the win-win payment spillover rate to exceed double digits this year due to the expansion of win-win payment.
Since introducing win-win payment in 2015, LG Electronics has encouraged the participation of primary partners so that secondary and lower-tier partners can also receive direct benefits. Partners participating in win-win payment are given additional points in regular evaluations as a benefit, and win-win payment performance is reflected in the conditions for partners to join the LG Electronics Win-Win Cooperation Fund. Partners can receive low-interest loans through the Win-Win Cooperation Fund when they need funds.
LG Electronics has been implementing various partner support policies based on five major promotion tasks: strengthening competitiveness, developing next-generation technologies, financial support, educational support, and infrastructure improvement for win-win growth. Wang Cheolmin, Executive Vice President of LG Electronics Purchasing/SCM Management Center, said, "We will work together with our partners to ensure that the warmth of win-win cooperation is delivered to secondary and lower-tier partners."
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