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| A Sukyoung Textile executive speaks with Hankook Ilbo, the sister paper of The Korea Times, in this 2021 July file photo. Korea Times file |
By Baek Byung-yeul
Nike and other foreign companies are easily able to evade the application of the fair trade law here even if they exploit their dominant position over domestic subcontractors by abusing them, which needs to be resolved, according to a lawmaker, Monday.
Rep. Park Sung-joon of the Democratic Party of Korea (DPK) said the Fair Trade Commission (FTC) ended its review early this year over an accusation that Nike violated the Fair Transactions in Subcontracting Act reported by its local supplier, Sukyoung Textile.
The lawmaker said that the review had wrapped up without a conclusion because the focus of the review is a foreign-based company and does not meet the requirements of the Fair Transactions in Subcontracting Act.
Sukyoung Textile had supplied shoe materials to Nike via an intermediate agency. The supplier claimed that the American sportswear company and its original equipment manufacturers (OEMs) excessively lowered the supply cost and passed on loss costs unfairly.
The supplier said it is true that it worked for the intermediate agency, but claimed that Nike made the decisions in every business deal including concerning production methods.
Sukyoung added that when it raised the issue about the unfair transaction with Nike, it was unilaterally suspended from business with the U.S. company.
The lawmaker pointed out that foreign firms have easily evaded the application of the subcontracting law, saying that very few Korean branches of foreign companies have been sanctioned by the FTC for violating the law.
In the past five years since 2018, 673 violations of the Fair Transactions in Subcontracting Act have resulted in warnings, correction orders or fines, but only five foreign companies have been punished.
"The FTC should make efforts to actively investigate foreign-based companies to protect domestic companies," Rep. Park said.
Regarding that, Kimberlee Chang Mendes, the general manager of Nike Korea, will be summoned to testify about the matter at the National Assembly's audit of the Ministry of SMEs and Startups and the Korea Intellectual Property Office on Oct. 6.
