LG Household & Health Care Adjusts Payment Terms Amid Middle East Crisis

LG Household & Health Care announced on the 14th that it will swiftly increase supplier payment rates to jointly overcome the crisis resulting from the ongoing Middle East tensions between the U.S. and Iran. This move reflects the company's commitment to fostering collaborative growth amidst challenging market dynamics.

In a meeting held at the LG Seoul Station Building, attended by Han Seung-soo, Minister of SMEs and Startups, and Lee Sun-joo, President of LG Household & Health Care, the company revealed plans to adjust payment terms in response to the recent surge in raw material prices. As part of this initiative, LG has already raised payment amounts by 2.56 billion KRW across 59 contracts with 15 partner companies.

Starting this month, LG Household & Health Care plans to gradually review additional price increases for around 16,000 contracts with 47 partner companies. The total increase is expected to reach a maximum of 20 billion KRW by the end of the year, signifying a proactive approach to ensuring supply chain stability and partner viability in a tumultuous economic landscape.

Minister Han emphasized that LG Household & Health Care's commitment to shared growth stands as a significant asset, enhancing the resilience of the national economy in times of crisis. The support for suppliers serves not only to stabilize partner businesses but also reinforces LG's position as a credible player within the industry.

Lee noted that despite the prevailing difficulties, the reliable delivery of materials from partners has enabled LG Household & Health Care to maintain stable product supply to customers. He underscored the company's ongoing exploration of various shared growth strategies, including the price adjustment program, to foster an equitable trading culture.

The price adjustment program is designed to alleviate the cost burden on suppliers by dynamically adjusting payment terms based on fluctuations in raw material prices. Since participating as an adjusted payment company in 2023, LG Household & Health Care has been recognized as an excellent adjustment partner for two consecutive years. It has also received the highest grade nine times from the Shared Growth Committee’s shared growth index.

This strategic partnership model signals a broader industry understanding of the importance of collaborative frameworks in enhancing competitive advantage and mitigating risks associated with volatile raw material markets. As LG Household & Health Care fortifies its alliances through shared initiatives, it sets a benchmark for industry standards while contributing to the overall stability of the beauty market.