SK Group signs co-prosperity pact with suppliers; Chey Chang-won vows trickle-down effect across industry

SK Group is moving to create a virtuous cycle in which the fruits of cooperation between large companies and their suppliers reach even lower-tier partners. The group plans to improve payment terms so that second- and third-tier suppliers can feel the benefits directly, while channeling fresh capital through SK hynix to strengthen the broader ecosystem.

SK held a signing ceremony Thursday for a "co-prosperity agreement among SK and its first-, second- and third-tier suppliers" at SK Telecom Tower in Jung-gu, Seoul, with about 150 people in attendance, including Korea Fair Trade Commission Chairman Joo Byung-ki, SK Supex Council Chairman Chey Chang-won, SV Committee Chairman Ji Dong-seop, affiliate CEOs and supplier representatives. Seven affiliates — SK hynix, SK Telecom, SK Ecoplant, SK Geocentric, SK Siltron, SK Inc. AX and SK Intellix — and more than 100 suppliers took part.

In his welcoming remarks, SK Supex Council Chairman Chey Chang-won said he hoped the event would be "not a one-time meeting but an occasion to deepen relationships and forge new cooperative ties," adding that "SK regards suppliers as core stakeholders and places great importance on their growth and well-being."

Chey said that in running a business, "good intentions" and "sustainability" can become a dilemma, and that progress is difficult "unless pursued through genuine fairness and co-prosperity." He said the company recognizes it bears significant responsibility and pledged to take a more forward-looking approach.

He also said that "structurally, the most tangible starting point is timely payment," and went on to say he would "work to ensure the trickle-down effect of the co-prosperity culture spreading to second- and third-tier suppliers reaches across the entire industry." He added that SK would "channel new funds through SK hynix and spare no support for technology, fabs and related areas."

Korea Fair Trade Commission Chairman Joo Byung-ki said in his congratulatory address that "the concentration of wealth, economic inequality and polarization are becoming serious obstacles to South Korea's economic development," and that resolving these problems requires a culture of co-prosperity between large companies and small and medium-sized enterprises to take root in the economy.

Joo said co-prosperity between large companies and their suppliers "will become social capital that underpins global competitiveness and drives the sustained growth of our economy," and that the agreement "will serve as a starting point for creating a virtuous cycle of inter-company co-prosperity by allowing SK's achievements to flow freely to mid-sized and small supplier companies."

He said companies that engage in unfair practices "will face strict sanctions," but pledged that companies leading co-prosperity efforts and focusing on innovation in their core businesses "will be able to receive fair recognition in the market." He also said the commission would provide full policy support to help a culture of co-prosperity and innovation spread across the market.

The agreement signed Thursday covers improved payment terms, better trade practices, and expanded research and development and financial support. For first-tier small and medium-sized suppliers, SK will shorten payment deadlines — settling invoices within a maximum of 10 days after the billing cutoff — and increase the proportion of cash payments. Suppliers that use the payment system will receive incentives, and through that system, second- and third-tier suppliers will also be able to receive funds from dedicated escrow accounts earlier than under the existing arrangement, easing their cash-flow burden.

In addition, first-tier suppliers that ease payment terms for their own second- and third-tier partners will receive bonus points in contract renewal and new supplier selection evaluations. The group will also expand its shared co-growth fund — currently operating at 680 billion won ($437 million) — to cover second- and third-tier suppliers, and will run tailored online education programs for supplier employees. Particularly, SK will deploy 1.4 trillion won in new funds, centered on SK hynix, to expand supplier support.

SK hynix will continue operating its analysis and measurement support center, which allows suppliers to develop new products using high-cost equipment, and will launch a new testbed called Trinity Fab to verify the reliability of materials, components and equipment from supplier companies. The company also plans to run an "R&D challenge reward program" that provides upfront funding for supplier technology development and settles compensation after the fact based on results and contribution.

SK Telecom operates a "same-day payment" service for small and medium-sized suppliers that disburses 100 percent cash within two business days of the billing cutoff, and has made early payments totaling 14.5 trillion won over 22 years. SK Ecoplant will strengthen its open innovation program supporting promising companies to help startups and small businesses commercialize their technologies. SK Geocentric will support suppliers in building sustainable capabilities in areas including productivity improvement and ESG and safety standards, while SK Siltron will continue providing tailored support — including opening up its wafer process education — to meet suppliers' specific needs.