Only 5 Large Companies Apply for Pilot Project on Delivery Price Linkage System... "Application Period Extended"

Ministry of SMEs and Startups Planned to Select 30 Companies
But Recruitment Results Poor Due to Large Corporations' Passive Attitude
Only 5 Large Corporations Including Booyoung Group Applied
Questions Raised on Pilot Project Effectiveness Including Linkage System Evaluation
SME Industry Demands "Legislation First, Then Supplementation"

Lee Young, Minister of SMEs and Startups, is speaking at the TF meeting on the Payment Linked System held on the 11th at the Foundation for Large, Small and Medium Enterprises and Agriculture-Fishery Cooperation in Jung-gu, Seoul.
[Photo by Yonhap News]

The number of large corporations that have applied to participate in the pilot project for the delivery price linkage system, which the government is promoting, has been limited to five, raising concerns about its effectiveness. According to the industry, the large corporations participating in the pilot project include five companies such as Booyoung Group. Cho Joo-hyun, Vice Minister of the Ministry of SMEs and Startups, responded on the 29th at the National Assembly's Special Committee on Livelihood Economy Stabilization to People Power Party lawmaker Cho Eun-hee's inquiry, "I am curious about how many have expressed their intention to participate in the pilot project so far," saying, "There are five companies," but added, "It is difficult to disclose the names of the companies."

Initially, the Ministry of SMEs and Startups announced that it would select about 30 large corporations for the pilot project of the delivery price linkage system to be implemented from next month. The plan was to select companies based on voluntary participation by large corporations, considering the number of subcontractors (partner SMEs), industries, and regions, and to provide incentives to participating companies. However, the results were disappointing. As a result of recruiting companies to participate in the project from the 12th to the 26th, only five companies applied. Consequently, the recruitment period was extended until the 2nd of next month.

The delivery price linkage system is a system that reflects major raw material price fluctuations in delivery prices to reduce the management difficulties of SMEs and improve unfair trade practices. The Ministry of SMEs and Startups plans to review the effects and side effects of the linkage system through a six-month pilot operation before introducing the system and to prepare legislative measures. However, if corporate participation remains low like this, the pilot project itself is bound to face questions about its effectiveness. A ministry official said, "There are quite a few companies that have expressed their intention to participate in the pilot project but have not made a final decision," adding, "We expect more than 30 companies to apply before the recruitment deadline on the 2nd of next month."

Representatives of small and medium-sized enterprises are urging the introduction of a delivery price linkage system at a press conference held on the 11th at the Korea Federation of SMEs in Yeouido, Seoul, to demand fair delivery prices for SMEs. [Image source=Yonhap News]

The SME sector expressed regret over the passive attitude of large corporations and emphasized the need for prompt legislation. A representative from the Korea Federation of SMEs said, "Given the clear dominant-subordinate relationship between large and small-medium enterprises, it was expected that large corporations would avoid the delivery price linkage pilot project, which would immediately affect sales," adding, "It is better to legislate first and then supplement the necessary details." He expressed concern, saying, "If the delivery price linkage system is not implemented in a timely manner, it could be misused to cut delivery prices when raw material prices fall in the future."

Meanwhile, President Yoon Suk-yeol also emphasized the importance of fostering a fair trade culture between companies and the government's role. On the 29th, at the Senior Secretary Meeting, President Yoon urged regarding the delivery price linkage system, "I hope a culture of mutual growth among companies will be established even before legislation. I ask the government to take the lead in creating a trade culture where fairness and common sense apply between prime contractors and suppliers."