Second Half Last Year: 89 Trillion Won in Subcontract Payments by Major Conglomerates... Non-cash and Delayed Payments Persist for Some

More Than Half of Payments by KG, Hite Jinro, and Doosan Made in Non-cash
Habitual Payment Delays Beyond the Legal Deadline by E-Land, Daebang Construction, and Others

It has been revealed that large business groups subject to public disclosure in Korea have created a win-win payment environment, as their payments to small and medium-sized partner companies for subcontracting work nearly reached 90 trillion won and cash payment ratios exceeded 98%. However, some major construction and manufacturing conglomerates are still repeating the practice of "delayed payment" by paying subcontractors beyond the 60-day statutory period specified by the Subcontracting Act.

89 Trillion Won in Subcontract Payments Released... '98.3% Cash-equivalent Payments' Anchoring a Win-Win Ecosystem

According to the "Results of Compliance Assessment for 2025 Second Half Disclosure of Subcontract Payment Terms" announced by the Fair Trade Commission on July 14, the total amount of subcontract payments made by 1,417 companies affiliated with public disclosure business groups was 89.1 trillion won. Among them, Hyundai Motor had the largest amount of payments with 11.2 trillion won, followed by Samsung (8.95 trillion won), HD Hyundai (5.58 trillion won), Hanwha (5.37 trillion won), and LG (4.77 trillion won).

The payment methods also received good marks. The average rate of direct cash payments, which allows partners to immediately receive cash, was 84.71%. Including alternative cash-equivalent payment methods maturing within 60 days, the ratio soared to as high as 98.35%. In particular, 29 business groups, accounting for 31% of all major conglomerates—such as Naver, Hanjin, and GM Korea—demonstrated sound transaction practices by making 100% of subcontract payments in pure cash.

As for payment periods, 66.82% of payments were made within 15 days, and 86.41% within 30 days, confirming that in most cases, payment is collected within a month, which is half the legal deadline of 60 days—a structurally virtuous cycle for partner firms.

Delayed Payments by E-Land and Daebang Construction... Some Still Have a Long Way to Go

However, some business groups struggling with tight cash flow exhibited chronic practices of neglecting cash payments and delaying payouts. Companies such as KG (24.51%), Hite Jinro (26.37%), LS (34.36%), and Doosan (39.59%) had a cash payment ratio below 50%. Of even bigger concern are transactions involving payments made beyond the 60-day statutory period—a potential legal violation. While the overall average for payments exceeding 60 days was only 0.16% (138.9 billion won), the problem was highly concentrated in certain groups. For instance, E-Land made a staggering 14.02% of its subcontract payments only after 60 days, while Daebang Construction (10.11%), SM (5.40%), Kyobo Life Insurance (2.94%), and KG (2.51%) also showed abnormally high delayed payment rates.

The installation rate of "dispute mediation organizations" designed to amicably resolve issues with partner companies was also poor. Since the system's introduction, the adoption rate has increased somewhat, but only 10.2% (144 firms) out of the 1,417 public disclosure companies have internal dispute mediation systems in place.

The Fair Trade Commission imposed a fine of 4 million won each on three companies—Voithru, Studio One Pick (both part of the Kakao group), and OnePol (part of the SK group)—for failing to fulfill mandatory disclosure requirements during this audit. It also issued a mass correction order for 31 other companies that either omitted or misreported disclosure items.

The Fair Trade Commission announced that it will not stop at this written inspection but will instead continue with close follow-up monitoring. Since the disclosure system for subcontract payment terms was introduced to strengthen the bargaining power of lower-tier partner companies, the commission pledged strict countermeasures against any practices that undermine the effectiveness of the system.

The Fair Trade Commission stated, "For those companies affiliated with public disclosure groups that showed a high volume of subcontract payments made after the 60-day deadline in this round of disclosures, we plan to further check if all subcontract payments and delayed interest were properly paid and will continue to rigorously monitor unfair practices related to subcontract payments."

This content was produced with the assistance of AI translation services.