Samsung Electronics Co., the world's largest
maker of computer memory chips, said Monday that it will establish a 1 trillion won (US$835 million) fund to boost support for its contractors.
The move comes as the company reported one of the largest quarterly earnings last month amid calls from President Lee Myung-bak and his
government on large businesses to share some of their profits with their contractors or small and medium enterprises (SMEs).
The fund, to be established jointly with a local bank, will be used help finance research and development of SMEs through low-interest loans, while Samsung will increase the number of its cash payments to suppliers, including its subcontractors, in an effort to help improve their liquidity conditions.
Under a seven-point plan for "mutual development" of suppliers, the company will also work to expand the number of its primary contractors, subject to direct cash payments, by upgrading the status of subcontractors that are already doing more than 500 million won worth of business with Samsung through primary suppliers, according to Park Jong-suh, head of Samsung's mutual development and cooperation center.
"The company established the seven-point action plan after reviewing its existing activities for mutual cooperation and listening to the needs of its suppliers as mutual development and existence have recently become an important social issue," Park said.
"We hope this seven-point action plan will be an answer to truly coexisting and developing with small and midsize companies."