bassexpander
Joined: 13 Sep 2007
Location: Someplace you'd rather be.
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 Posted: Mon Sep 29, 2008 9:25 pm Post subject: Does this article mean salarymen are losing room salon perks |
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http://joongangdaily.joins.com/article/view.asp?aid=2895480
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Cash crunch is affecting even large companies
September 30, 2008
In recent years, top Korean conglomerates have been in the habit of paying their smaller suppliers in cash, instead of issuing commercial paper. Those times might be ending.
The tightening of the global financial market that quickly followed Wall Street�s meltdown has made cash less available even to some major players. That, in turn, has made commercial paper, a form of short-term loan used in business-to-business transactions, more attractive.
The revival of commercial paper is only one of many signs that fundamental economic conditions are changing, but it�s one of the most telling.
Representatives of one of the nation�s 10 biggest conglomerates, who asked for anonymity for themselves and their company, said the conglomerate recently began issuing three-month commercial papers to their suppliers. Before, the conglomerate had paid the suppliers cash within 20 days of receiving goods.
�We had no choice but to shift a part of our financial burden to our suppliers� shoulders, with sales and profits declining and with global financial markets tightening,� explained one of the representatives. Due to these rocky conditions, the conglomerate�s suppliers have also come to face liquidity problems.
A representative of one of the conglomerate�s suppliers, who also refused to be identified, said his company tried to exchange the commercial paper for cash at moneylenders in Myeong-dong, the center of private loan business in Seoul. The moneylenders turned them down based on rumors that the financial condition of the conglomerate was unsound.
The state-run Industrial Bank of Korea said yesterday it issued 4,005.7 billion won ($3.4 billion) worth of commercial paper from large companies to their small and midsize suppliers this year through the end of August. The amount is up 19 percent from the corresponding period last year.
�This year, more small companies are visiting moneylenders in Myeong-dong to exchange the commercial paper for cash,� said a private loan dealer, who refused to be identified. �This proves the conglomerates have liquidity problems.�
There are other signs of economic stress. Some large conglomerates are tightening their belts by reducing all extra costs. KT, the nation�s biggest landline phone company, recently collected all the corporate credit cards held by non-executive workers in an effort to reduce expenditures. The company is also considering cutting annual bonuses to 400 percent from 500 percent of monthly basic pay. Kim Shin-bae, chief executive officer of SK Telecom, the nation�s largest mobile service provider, said in a recent meeting with other executives, �No department of our company will be exempt from our cost-saving plan.�
�It does not mean a cut in spending in facilities, research and marketing,� explained an SK Telecom representative. �Instead, it means that we will eliminate wasteful spending.�
By Lee Hee-sung JoongAng Ilbo [[email protected]] |
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