Key Points
- South Korea to provide 560 billion won ($404.55 million) in liquidity support to small businesses affected by e-commerce payment delays.
- Authorities are investigating TMON and WeMakePrice for failing to make payments to vendors.
- Support includes low-interest policy loans, loan repayment extensions, and tax payment deferrals.
- Missed payments total around 210 billion won, with customer damage estimated at 50 billion.
South Korea’s financial authorities have announced a liquidity support package worth at least 560 billion won ($404.55 million) for small businesses impacted by recent payment delays from e-commerce platforms. The finance ministry revealed this on Monday, following an investigation into Seoul-based e-commerce firms TMON and WeMakePrice, owned by Singapore-based Qoo10, for failing to make timely payments to vendors.
Vice Finance Minister Kim Beok-seok emphasized the government’s commitment to mitigating the damage. “The government will utilize all available resources to minimize damage,” Kim stated, acknowledging that while the responsibility lies with the e-commerce platforms, the government cannot remain a passive observer.
The support measures will primarily consist of policy loans with low interest rates for small businesses. Additionally, repayment extensions of existing loans and tax payments will further relieve the affected businesses.
The situation arose last week when authorities investigated TMON and WeMakePrice after numerous vendors reported delayed payments. On Saturday, both companies claimed they were taking steps to minimize customer damage and were actively informing customers about ways to cancel credit card payments.
Anxious customers had been seen lining up outside the offices of TMON and WeMakePrice in Seoul last week, seeking resolutions. Ku Young-bae, the South Korean founder of Singapore-based Qoo10, apologized on Monday for the payment delays and assured that efforts were underway to rectify the situation.
The government estimates that the missed payments by the e-commerce platforms have accumulated to around 210 billion won. While Qoo10 mentioned assessing the full impact on vendors was challenging, it cited customer damage at approximately 50 billion won. The company has communicated to financial authorities its intent to secure $50 million to address the issue. Still, as of Sunday, no detailed plan had been submitted, according to the Financial Services Commission.
The government’s response includes utilizing policy loans, extending loan repayments, and deferring tax payments to assist struggling small businesses. This intervention highlights the importance of maintaining stability in the e-commerce sector, which is crucial in the modern economy.
The ongoing situation with TMON and WeMakePrice underscores the need for robust regulatory oversight and timely intervention to protect small businesses from financial instability caused by large e-commerce platforms.
