Business lobbying group chief agrees some markets should be only for small firms


Lawmakers on Wednesday chided business giants for taking advantage of their dominant status to squeeze out suppliers and muscling in on business that should be run by smaller firms such as coffee shops and restaurants.

The parliamentary panel for knowledge economy called on conglomerates to play a greater role in seeking mutual prosperity with small and medium-sized companies during a hearing two days after President Lee Myung-bak declared a shift from growth-first policy to a compassionate market economy.

Ruling and opposition lawmakers grilled Huh Chang-soo, chief of the Federation of Korean Industries, or a lobbying group representing the country’s largest businesses, with some even saying the FKI should be disbanded.

“Large conglomerates did not grow on their own; they grew with full support from the government and the sacrifice of small firms and the Korean people,” said Rep. Park Min-shik of the ruling Grand National Party.

“Big companies must perceive mutual prosperity with small companies as their due responsibility to society, not as sacrificing or relinquishing their profits.”

The country’s largest conglomerates have been facing mounting public criticism for twisting suppliers’ arms until they cough up the lowest possible prices and encroaching upon small companies’ business areas.

“The conglomerates’ intrusion has gone so far as to selling rice cakes and fish cakes,” Rep. Cho Kyung-tae of the main opposition Democratic Party said.

“Excessive intrusion by the big firms will not be helpful at all for the virtuous cycle of the economy.”

FKI president Huh accepted the notion that certain areas should be left for smaller companies as “something to deeply think about.”

“There are views that conglomerates should not start businesses (usually) run by small companies, and I agree (business giants) should control ourselves out of self-respect,” Huh said.

In response to criticism that big firms were bullying suppliers to cut prices, Huh said he believed most conglomerates have been trying hard not to, but the cases of certain companies have cast the blame on them in a lump.

About a recent news report that the FKI drafted a plan for each conglomerate to lobby certain politicians to counter the growing anti-chaebol sentiment, Huh apologized and said the FKI will look into the matter.

In light of the latest allegations, Rep. Park Jin of the GNP called for the dismantlement of the FKI.

“The FKI shows that it has failed to outgrow its past attempts to lobby politicians,”

“The FKI should be disbanded for the development of capitalism and market economy, for an ecosystemic development to reduce disparities and promote shared growth.”

Kim Ki-moon, chief of the Korea Federation of Small and Medium Companies, said what the small companies need is not protection, but the improvement of irrational systems and unfair transaction practices.

Knowledge Economy Minister Choi Joong-kyung said he believed it undesirable for large companies to jump into distribution businesses.

“An oligopoly of distributors run by conglomerates would undermine sound development of market economy,” Choi said.

The government will keep up with policies to prevent such large companies from encroaching upon small-alley businesses, he said.

By Kim So-hyun (sophie@heraldcorp.com)