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Index to gauge treatment of suppliers

Government and private-sector representatives will introduce a new index to gauge large companies’ relationship with smaller suppliers as part of its efforts to promote broad-based growth, officials said Wednesday.

The shared growth index will be announced once annually, starting with 56 companies including Hyundai Motor Co., POSCO and Samsung Electronics next year, the Commission on Shared Growth for Large and Small Companies said.

The panel consisting of government, businesses and academia was launched in December.

The index will be calculated from the Fair Trade Commission’s and the panel’s separate assessments. The FTC will conduct its survey once a year and the commission twice a year, reflecting suppliers’ opinions.

The commission will focus on malpractice such as forcing price reductions and stealing technologies from suppliers.

The FTC will focus on more quantitative issues such as the use of standardized subcontracting forms and primary suppliers’ measures for supporting secondary suppliers.

The shared growth index could be published as early as next February, the commission said.

The 56 firms have been selected from six categories ― electric and electronics; automotive, machinery and shipbuilding; chemical, non-metallic and metallic materials; construction; wholesale and retail; telecom and IT services ― according to the scale of their sales and their supplier network.

Along with Samsung, LG Display and LG Electronics are among the 11 firms selected from the first category, while the 15 companies from the second category include Hyundai Heavy Industries and Kia Motors Corp.

POSCO is among the 10 selected from producers of chemical, non- and metallic materials.

Of the others, 12 companies including Hyundai Engineering and Construction are from the construction industry, three are in retail or wholesale businesses. Five telecom and IT service providers including KT Corp. and SK Telecom will be assessed according to the index.

While the commission’s decision is a step forward in establishing a standardized frame for assessing related issues, some contentions remain over the assessment methods.

While various lobby groups including the Federation of Korean Industries have requested for the exclusion of support measures among suppliers from the categories used by SMEs to assess large firms, such demands have been overruled by the FTC.

The question of how to publish the result of the assessment according to the new index also remains unanswered.

While businesses are said to be opposed to a ranking system, the Commission on Shared Growth for Large and Small Companies has yet to decide whether to rank firms by score, rank by score but within industry categories or to publish the results in terms of grades.

By Choi He-suk  (cheesuk@heraldcorp.com)
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