Hyundai-Kia has signed a trade pact with its suppliers that it claims will enhance collaborative efforts and establish a win-win relationship with small and medium-sized enterprises.
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The fair trade agreement is with some 2,368 suppliers and the company says it is the first time that a single firm has sealed a fair trade agreement with such a large number of partner companies.
“The deal has paved the way for Hyundai-Kia Automotive Group to establish a fair trade order with partner companies and promote mutual growth through co-existence and cooperation,” the company said.
The deal was agreed to by 10 affiliates of Hyundai-Kia Automotive Group and the partner firms.
Under the agreement, the auto giant will guarantee fair and transparent subcontract deals “by observing subcontracting laws; adopting three guidelines on co-existence and cooperation; and preparing comprehensive measures to support partner firms.”
The three guidelines cover concluding contracts, selecting and operating partner firms and establishing and operating an internal committee to deliberate subcontract deals.
Under the guidelines, Hyundai-Kia will decide subcontract fees based on commodity prices and other variable factors in the market environment; secure objectivity, fairness and transparency in selecting and terminating relationships with partner firms; provide fair opportunities to take part in bidding; and prevent and monitor unfair deals, among others.
Hyundai-Kia also pledged to help smaller suppliers raise their global competitiveness.
For SME suppliers, the conglomerate plans to provide 10 billion won for the research and development of environmentally-friendly automobiles and spend 30 billion won to create a fund for management innovation. Since 2006, the company has been paying SME suppliers in cash to help them improve their financial health.
The group also plans to jointly purchase commodities and advance overseas together with suppliers to help enhance their competitiveness.
