Family-controlled conglomerate LG Group has announced it will award 400 billion won (€278 million) worth of contracts to smaller businesses, as the South Korean government moves to rein in the economic dominance of its biggest family businesses.
In the voluntary move, LG will award system integration contracts worth 230 billion won, advertising deals worth 100 billion won and the remainder to construction contracts.
Known as chaebols, the country’s big family-controlled conglomerates – which include Samsung, Hyundai, Lotte, Hanjin and Doosan – are perceived by many to stifle competition and entrepreneurship.
The 10 biggest chaebols account for over half the value of the almost 2,000 companies listed on the country’s stock exchange, and sales at the five biggest are equivalent to more than half of South Korea’s gross domestic product.
South Korean President Park Geun-hye has vowed to curtail their economic dominance and make small businesses the next growth engine of the country’s economy. She has also called for better ties between chaebol and smaller firms.
LG’s actions follow similar steps made by Hyundai, which in April announced it would award logistics contracts worth 480 billion won to smaller firms.