The Ministry of SMEs and Startups (MSS) announced Thursday that it signed a cooperation agreement between the plastics processing industry and major and mid-sized buyer companies at the National Assembly in Yeouido, Seoul. The agreement was hosted by the Democratic Party of Korea's Euljiro Committee.
Crude oil prices have surged due to the ongoing Middle East conflict, significantly increasing cost burdens for small and medium-sized plastics processing companies. There is a pressing need for large and small businesses to work together to address difficulties in the field where rising costs are not adequately reflected in supply prices.
The agreement was first pursued with major and mid-sized food industry buyers, which have high plastic packaging usage and are expected to generate significant ripple effects across the supply chain. Nine major and mid-sized buyer companies participated, including CJ CheilJedang (097950.KS), Daesang (001680.KS), Nongshim (004370.KS), Lotte Chilsung Beverage (005300.KS), LG Household & Health Care (051900.KS), Sangmidang Holdings, Starbucks Korea, GS Retail (007070.KS), and the Agricultural Materials Division of NH Economic Holdings. The plastics processing industry, MSS, and the Fair Trade Commission also joined the agreement.
The participating buyer companies agreed to actively cooperate on adjusting supply prices to reflect raw material cost increases, making early payments for supplied goods, and extending delivery deadlines and waiving late penalties due to raw material supply issues. The government plans to support agreement compliance by providing incentives to participating companies, including reflecting participation in the Win-Win Growth Index, preferential awards, and reducing the burden of regular subcontracting surveys.
MSS took a leading role in specifying the cooperation details through close consultations with buyer companies, plastics processing SMEs, the National Assembly, and related ministries during the agreement process.
"This agreement will be an important opportunity to ease the structure where raw material cost burdens are concentrated on SMEs and to help large and small businesses overcome the crisis together," said Lee Byeong-kwon, Second Vice Minister of MSS. "We will work with the National Assembly and related ministries to expand cooperation agreements across the industry and continue to develop and strengthen incentives to encourage corporate participation."
He added, "We will strengthen compliance monitoring and field support so that the supply price indexation system works effectively in practice, and continue policy efforts to establish a fair trading environment."