The Ministry of SMEs and Startups said on the 9th that, hosted by the Democratic Party of Korea's Euljiro Committee, it signed a mutual growth agreement between the plastic processing industry and large and mid-sized demand corporations. The government said it plans to use the agreement to ease the burden of surging materials and supplies prices caused by the Middle East war and to improve management stability for small and mid-sized companies.
Recently, as crude oil prices have risen, plastic materials and supplies prices have jumped, significantly increasing the expense burden on processing small and mid-sized companies. However, many small and mid-sized companies have not been able to fully reflect the higher costs in their supply prices and have faced worsening profitability. In response, the government and industry moved to address these structural problems through cooperation between large and small companies.
The agreement was pursued particularly in the food sector, where the share of plastic packaging use is high. The mutual growth agreement is expected to have a strong spillover effect across the supply chain once signed.
Eight demand-side large and mid-sized corporations took part in the agreement, including CJ CheilJedang, Daesang, Nongshim, Lotte Chilsung Beverage, LG H&H, Sangmidang Holdings, Starbucks Korea, and NongHyup Economic Holdings Farming Materials Headquarters. Plastic processing small and mid-sized companies, the Ministry of SMEs and Startups (MSS), and the Korea Fair Trade Commission also joined the agreement.
The participating corporations agreed to reflect the increase in materials and supplies prices in supply payments and to pay earlier. They also agreed to cooperate on measures to ease the burden on small and mid-sized companies, such as extending delivery deadlines and exempting the penalty for delay if delivery is postponed due to disruptions in the supply of materials and supplies.
The government plans to provide incentives to participating corporations, including reflecting results in the Shared Growth Index evaluation, preferential awards, and easing the burden of regular surveys on subcontracting practices.
The Ministry of SMEs and Startups (MSS) took the lead in preparing the agreement through consultations with demand-side corporations, small and mid-sized companies, the National Assembly, and related ministries. Lee Byeong-gweon, the second vice minister of the MSS, said, "This agreement will ease the structure in which the burden of rising materials and supplies prices is concentrated on small and mid-sized companies and will serve as an important opportunity for large and small companies to overcome the crisis together," adding, "We will spread the mutual growth agreement across the industry and strengthen incentives that can encourage corporate participation."