South Korea's top business conglomerates have steadily expanded their support for smaller companies but the lack of incentives to do so continues to hinder such efforts, a survey showed Thursday.

In a survey conducted by the Federation of Korean Industries, the country's 30 largest business groups and their subsidiaries said they have increased their combined cash payment to their suppliers to 81.7 percent from 64.3 percent six years earlier when the government launched the state commission on corporate partnership.


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The average duration of time between payment deadline and actual payment has been reduced to 12.1 days from 17.8 days over the cited period, the survey showed.

Partly reflecting the large companies' support for local suppliers, 88 percent of those surveyed said they found their new business partners among local businesses over the past six years while only 12 percent said their new suppliers came from overseas.

Still, the survey showed a majority of large firms here rather remained passive in supporting smaller companies, with 34 percent of those surveyed saying their support for their suppliers remained nearly limited to cash payment of their fees, while another 30.2 percent said their support included some assistance to help boost their suppliers' output.

Only 9.4 percent of respondents said their support included funds for research and development of their suppliers and other smaller firms.

The FKI noted such a lukewarm attitude of large companies toward joint development may be because there are little or no incentives for them to do so.

"For instance, an official from a large company who took part in the survey has said the government program had many requirements but little incentives for large companies," the FKI said in a press release.

Also in the survey, 31.2 percent of respondents cited the lack of incentives that could encourage voluntary participation of companies in the program as the most serious problem, according to the FKI, the largest business lobby in South Korea with the membership of the country's 600 largest companies.

"The government policy on joint development of large and smaller firms did help raise the overall awareness about the issue and even somewhat promote a business culture toward that end," it said.

"But to increase large companies' participation in and enthusiasm for the program, the program needs to be improved and offer greater incentives to those that work voluntarily to support joint development of smaller companies," it added. (Yonhap)