Samsung To Establish $445M Fund To Protect Small Businesses

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Samsung Electronics on Friday announced its intentions to establish a $445 million fund aimed at protecting small businesses and suppliers in its home country of South Korea. The move might be a response to President Moon Jae-in’s recently unveiled efforts to take on all major family-run conglomerates in the Far Eastern country, commonly referred to as chaebols. The newly elected President won the recently held election on a political platform that focused on limiting the power of chaebols that dominate the country’s economy and have previously also influenced its political landscape. The latest example of the latter is the snap presidential election held in Korea earlier this month after former President Park was impeached by the parliament due to her involvement in a major political scandal that also saw Samsung Group’s Vice Chairman and heir apparent Jay Y. Lee arrested on numerous charges.

President Moon campaigned on the platform of discouraging contract jobs, increasing the minimum wage, and making a number of other worker-friendly moves, all of which would require him to directly take on chaebols like Samsung and Hyundai. The largest business conglomerate in the country is apparently not looking to directly clash with the President’s upcoming policy initiatives, saying that the aforementioned fund is meant to borrow interest-free cash to its smaller suppliers so that their subcontractors can be paid in a timely manner, something that President Moon is likely to welcome. Regardless, the decision to establish the fund was reportedly made in late 2016, with Samsung saying that the initiative will run for exactly four years, until May 2020.

The Seoul-based consumer electronics manufacturer has recently been in the process of reorganizing its operations in an effort to streamline its businesses and increase profitability while simultaneously being pressured by certain investors to adopt a holding company structure and unlock additional shareholder value. While the company declined the latter, the fact that its de facto leader is currently under arrest likely won’t bode well for its moderate-term plans, especially if Lee ends up being issued a prison sentence for his alleged role in the corruption scandal that shook the entire Far Eastern country last fall.