KFSB Requests Large Enterprises to Hold Themselves in Asking for Excessive Drop in Small Vendors' Selling Prices

摘要

The Korea Federation of Small and Medium Business (KFSB) has recently asked large-size enterprises, which are requesting their small and mid-size vendors to lower their unitprices in sales in fear of any possible deterioration in their profitability in the wake of a drastic drop in the won-dollar exchange rate, to make cooperation byn absorbing some portion of such a loss by themselves. It was confirmed that the target amount for a drop in the vendors' unit prices has been suggested in proportion to the sales amount or operating income rate of each vendor. Large-size enterprises are known to have asked to cut the current selling prices by 2-3 percent in the case of vendors whose annual sales amount is less than 50 billion won each, 5-10 percent in the case of vendors whose annual sales amount are in a range between 50 billion won and 100 billion won each and 5-10 percent or total operating income by 20 percent in the case of large vendors whose annual sales amount reach over 100 billion each. Taking an example, a vendor, identified just as 'A,' which recorded annual sales of 80 billion won for 2005, was asked to cut their unit prices by 5 percent this year.