LG Chem will establish fair transaction practices and push five key strategies to boost partners' competitiveness for shared growth with suppliers.
On the 20th, according to related industry sources, LG Chem selected five win-win measures with partners — ▲ fostering a fair transaction culture ▲ improving financial support and payment terms ▲ supporting ESG management activities ▲ strengthening partner capabilities ▲ information sharing and communication — and is pushing concrete plans.
First, LG Chem moved to support small and midsize enterprises by lowering supply prices. The burden of petrochemical feedstock costs grew as geopolitical instability and crude oil price volatility increased, adding pressure to smaller companies' operations.
In line with the government's intent to support crude oil for naphtha production, LG Chem temporarily cut delivery prices by 100,000–200,000 won per ton for small and midsize customers that produce essential daily materials such as vinyl and packaging, considering each product's naphtha usage ratio and price.
LG Chem also supports partners' smooth cash management. Through the 106.1 billion won low-interest loan program "Shared Growth Fund," LG Chem is providing working capital to partners. It also created the 100 billion won low-interest "ESG Co-Prosperity Growth Fund" with Shinhan Bank to finance partners' efforts to strengthen environmental, social and governance (ESG) management, including responding to climate change and developing eco-friendly materials.
Payment terms for subcontractors are also steadily improving. LG Chem increased monthly closings for subcontract payments to three times and pays 100% in cash within 10 days after each closing.
LG Chem is supporting partners' technologies while also working to build their capabilities. The LG Chem Technology Research Institute and the CS Center provide about 4,000 analyses and tests a year free of charge, easing difficulties for partners that lack testing equipment. They also provide partners with outdated analysis and laboratory equipment at no cost.
In addition, LG Chem identifies productivity improvement tasks tailored to partner characteristics in areas such as product, process and organizational innovation to support fundamental capability building. It expanded the scope of support beyond Smart Factory establishment to the ESG innovation segment.
Meanwhile, LG Chem received the "highest" grade for the 10th straight year in the "2024 the Shared Growth Index evaluation" released by the Korea Commission for Corporate Partnership. The Shared Growth Index is an indicator that quantifies Korean conglomerates' level of shared growth based on surveys of small and midsize enterprises' perceptions of large companies' win-win management, compliance assessments of fair transaction agreements by the Korea Fair Trade Commission, and comprehensive evaluation results by the Korea Commission for Corporate Partnership.