Improving payment conditions, including the expansion of the Win-Win Payment System
Expanding financial (90 billion KRW) and welfare support for 2nd-tier and lower suppliers
July 6, 2026
On Monday, July 6, the Korea Fair Trade Commission (KFTC, Chairman Biung-Ghi Ju) held the "LG – 1st, 2nd, and 3rd-Tier Suppliers Win-Win Cooperation Agreement Signing Ceremony" at LG Science Park, with representatives from seven LG Group affiliates and their suppliers in attendance.
The seven participating affiliates are LG Electronics, LG Display, LG Innotek, LG Chem, LG Energy Solution, LG Household & Health Care, and LG Uplus.
This win-win agreement was established to create a sustainable cooperative ecosystem where the fruits of LG's mutual growth efforts do not stop at 1st-tier suppliers but extend seamlessly to 2nd-tier and lower suppliers. It marks the third such agreement signed among large enterprise groups, following Samsung and SK.
The main contents of the agreement consist of ▲improving payment conditions for LG and its 1st and 2nd-tier suppliers, and ▲expanding mutual cooperation support, such as financial and welfare assistance, for LG's 1st, 2nd, and 3rd-tier suppliers. These measures were formulated through voluntary consultations between LG and its suppliers.
Key Content of the Agreement
1. Improvement of Payment Terms
First, LG and its 1st and 2nd-tier suppliers have agreed to apply improved payment conditions for their respective lower-tier partners. This reflects the understanding that the timing and method of receiving payments are critical factors supporting the smooth fund management and stable business operations of SME suppliers.
LG's Commitment: LG will operate at least three closing dates per month for its 1st-tier suppliers and ensure payments are made within 10 days of the closing date. Alongside this, LG will strictly maintain a 100% cash-equivalent payment ratio and expand payments through the "Win-Win Payment System." Notably, through this agreement, LG plans to increase the "Win-Win Payment Trickle-Down Rate"—the rate at which payments made via the Win-Win Payment System by a large enterprise to a 1st-tier supplier are passed down to a 2nd-tier supplier—to over 10%. (Note: An increase in this trickle-down rate means that 2nd-tier and lower suppliers can safely recover funds paid by large enterprises at a lower cost.)
1st and 2nd-Tier Suppliers' Commitment: These suppliers have also committed to shortening payment periods, increasing the ratio of cash-equivalent payments, and striving to utilize the Win-Win Payment System for their lower-tier partners.
Incentives: Simultaneously, LG will prepare and provide various internal support measures for suppliers who faithfully participate in these initiatives, thereby encouraging active involvement. By having 1st and 2nd-tier SMEs join in on these improvements, the benefits of LG's enhanced payment conditions are expected to reach the smaller 2nd-tier and lower-tier suppliers.
2. Expansion of Financial and Welfare Support
Second, in addition to supporting 1st-tier suppliers, LG will expand various financial and welfare support programs to foster mutual growth with 2nd and 3rd-tier suppliers, while further solidifying the foundation for fair trade.
Financial Aid: Through this agreement, LG has decided to newly allocate at least 90 billion KRW—10% of its 900 billion KRW Shared Growth Fund currently operated for interest-free loans and other support—specifically for 2nd-tier and lower suppliers.
Welfare Expansion: Eligibility for the employee welfare mall will be expanded to include employees of 2nd-tier and lower suppliers.
Dispute Prevention: Furthermore, all seven participating affiliates will establish and operate a "Subcontract Payment Dispute Mediation Body" to proactively prevent disputes related to subcontracting payments.
This agreement is expected to benefit approximately 1,300 suppliers within LG's supply chain. Furthermore, LG expressed its commitment to continuously practicing the principles of mutual growth by incorporating the core contents of this agreement into the Fair Trade Agreements scheduled to be signed with its suppliers early next year.
KFTC Chairman Biung-Ghi Ju stated, "The concentration of wealth, along with deepening inequality and polarization, is the most critical obstacle to the economic development of the Republic of Korea today." He noted, "The abnormally exploitative corporate ecosystem is pointed out as the most significant cause of this."
He emphasized, "The competitiveness and sustainable growth of large enterprises are completed upon a healthy industrial ecosystem where they grow together with their suppliers. I hope that a warm culture of mutual cooperation, starting from LG and spreading evenly to 1st, 2nd, and 3rd-tier suppliers, can firmly take root here."
The KFTC plans to closely monitor whether this agreement is faithfully implemented through Fair Trade Agreement evaluations and will provide incentives to excellent companies in the future. Furthermore, the KFTC will continuously encourage the conclusion of win-win agreements between large enterprises and suppliers to further solidify a desirable culture of mutual growth across the industry.