[THE INVESTOR] Top business conglomerates in South Korea have expanded investment in their smaller companies but little incentives hinder such efforts, a survey showed on Oct. 20.

In a survey conducted by the Federation of Korean Industries, the country’s 30 largest business groups and their subsidiaries said they have increased their combined cash payment to their suppliers to 81.7 percent from 64.3 percent six years earlier when the government launched the state commission on corporate partnership.

Cash settlement helps small and medium-sized firms by improving their cash flows.

The average duration of time between payment deadline and actual payment has been reduced to 12.1 days from 17.8 days over the cited period, the survey showed.

Partly reflecting the large companies‘ support for local suppliers, 88 percent of those surveyed said they found their new business partners among local businesses over the past six years while only 12 percent said their new suppliers came from overseas.

Still, the survey showed a majority of large firms here rather remained passive in supporting smaller companies, with 34 percent of those surveyed saying their support for their suppliers remained nearly limited to cash payment of their fees, while another 30.2 percent said their support included some assistance to help boost their suppliers’ output.

Only 9.4 percent of respondents said their support included funds for research and development of their suppliers and other smaller firms.

The FKI noted such a lukewarm attitude of large companies toward joint development may be because there are little or no incentives for them to do so.

(theinvestor@heraldcorp.com)