Samsung Electronics said Monday that it will form a 1 trillion won ($843.24 million) fund to support its suppliers in October, joining a growing number of conglomerates pursuing co-prosperity with smaller partners.
The world’s largest technology company said the fund will be used to support facility investment, technology development and operation funding assistance. It will be run in cooperation with the Industrial Bank of Korea.
Specific details like the interest rate have yet to be decided, said Samsung officials. The company will pick recipients after credit checks by the bank.
The move came amid growing calls from the government and the public for large firms to make a greater contribution to smaller firms and society.
President Lee Myung-bak spoke about the necessity of a win-win strategy for large firms and their suppliers in his speech marking the 65th Liberation Day on Sunday.
“The key of the unveiled plan is that we largely strengthened support for second-layer and third-layer suppliers which have been rather isolated in the past,” said Park Jong-suh, executive vice president and chief of the partner collaboration and enhancement center at the company. “Samsung Electronics has always put a focus on mutual development but we reexamined the situation since the discussion in the social level started in late June and we’re releasing the results (Monday).”
To help save procurement costs for its suppliers, Samsung will directly purchase core raw materials and provide them to those companies, it said.
The method will first be applied to the manufacturing process of electric items such as refrigerators, washers, air conditioners and liquid-crystal display televisions. The company will then consider using the method for the manufacturing of other products.
The company will give additional support for its second-layer and third-layer suppliers, possibly boosting their position to primary suppliers if their transaction records over 500 million won per year.
It will also make efforts for the primary and second-layer suppliers to go forward with fair trade by operating an online report system and providing the educational support program -- currently available for primary suppliers -- to second-layer suppliers.
Some programs which have been held for the affiliated firms are economic consulting supports, employee nurturing programs, giving away and business infrastructure improvement measures.
Samsung will also implement the “Best Company” policy in a bid to develop 50 of the small and mid-sized firms into globally-recognized ones by 2015.
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