South Korea’s FTC advances supply-chain reforms with POSCO agreement

South Korea’s Fair Trade Commission has signed a new win-win agreement with POSCO and five of its affiliates in a move intended to improve payment practices, widen performance-sharing benefits and strengthen industrial safety across a supply chain that the regulator says covers about 5,300 companies.

The accord, sealed at POSCO Centre in Seoul on 16 July, brings together POSCO, POSCO International, POSCO E&C, POSCO Future M and POSCO DX. The commission said it is the fift...

h such group-wide arrangement reached with a major business conglomerate, after similar deals involving Samsung, SK, LG and Hyundai Motor.

At the heart of the pact is a tighter approach to payments. POSCO has agreed to settle invoices from first-tier suppliers within 10 days of receiving goods and to maintain a 100% cash-payment principle, while also making fuller use of Korea’s win-win payment system. In turn, first- and second-tier suppliers will be encouraged to pay their own lower-tier partners within 30 days, raise cash-settlement ratios and expand their use of the same system.

The agreement also broadens POSCO’s performance-sharing programme beyond first-tier suppliers, extending it to smaller subcontractors further down the chain. Under the new framework, gains from technological development and process improvements can be shared through cash rewards, additional order volumes or intellectual property arrangements.

Safety is another major pillar. POSCO said it will provide consulting to help suppliers build more robust safety-management systems and will support the introduction of safety equipment in order to lift industrial standards throughout the network.

The commission expects the measures to benefit thousands of suppliers linked to POSCO’s operations. The company also plans to fold the commitments into a fair trade agreement due to be signed early next year, while the FTC said it will assess compliance through its regular evaluation process and reward firms that perform well.

FTC chairman Ju Byeong-gi said the arrangement reflected the idea that growth depends on a market order built on co-operation rather than confrontation. He added that the agency would remain a supporter of the partnership between POSCO and its suppliers.

The deal comes as South Korea continues to push larger industrial groups to share gains more widely with subcontractors, a policy line that has increasingly linked corporate competitiveness with supply-chain stability, safer workplaces and more predictable payment terms.

Source: Noah Wire Services