LG is partnering with the Korea Fair Trade Commission to expand co-prosperity payments to second- and third-tier partners. The plan is to raise the "co-prosperity payment trickle-down rate," in which delivery payments made by a large company are passed on to lower-tier partners, to 10% or more—the highest among Korea's corporate groups—to build a partner-centered, sustainable supply chain.
LG said on the 6th it held the "LG–first-, second- and third-tier partner co-prosperity agreement signing ceremony" at LG Science Park in Magok, Seoul, with Korea Fair Trade Commission Chair Ju Biung-ghi, LG Electronics President Lyu Jae-cheol, LG Display President Jeong Chul-dong, LG Innotek President Moon Hyuk-soo, LG Energy Solution President Kim Dong-myung, CEOs of seven affiliates, and partner representatives in attendance.
With this agreement, about 1,300 partners (first and second tier) in LG's supply chain are expected to benefit. While maintaining a 100% cash-like payment ratio for first-tier partners, LG decided to expand the "co-prosperity payment trickle-down rate," in which payments made through co-prosperity settlements are passed on to second- and lower-tier partners, to 10% or more, the highest level among Korea's corporate groups.
Partners that use co-prosperity payments will also receive incentives such as bonus points in regular evaluations and financial support. The seven LG affiliates paid about 13.5 trillion won to first-tier partners through co-prosperity payments last year. The company expected that if a similar scale is executed this year, about 1.3 trillion won will be passed on to second-tier partners based on LG's creditworthiness.
In addition, more than 10% of the roughly 900 billion won co-growth fund will be directed to second- and lower-tier partners, and partner employees will be allowed access to a dedicated welfare mall operated in the same way as LG affiliates.
LG will expand investment not only in financial support but also in strengthening partners' technological competitiveness. Since 2019, LG Electronics has supported more than 250 partners in converting to smart factories. LG Display operates joint research and development and joint patent application programs. LG Innotek supports AI-response training and transfer of production technologies through its partner capability enhancement training center. LG Chem and LG Uplus are also continuing to provide technical training and support for obtaining certifications.
Ha Beom-jong, president of LG Corp., said, "We will promote the spread of co-prosperity payments, expand support for second- and lower-tier partners, strengthen a fair-trade foundation, and continue to broaden the scope of co-prosperity to local communities and young people."