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Shared Growth with Partners

Supporting Growth and Innovation of Business Partners

Amorepacific Group conducts various programs to promote shared growth with business partners.

Amorepacific Group supports its partners not just as part of CSR, but with a focus on sustainable growth. We implement various shared growth programs to improve technology development capabilities, strengthen competitiveness through financial support and support to increase sales.

Supporting Technological Innovation of Our Partners

In 2018, six partners took part in the Business Partner Study Group on Innovation, a community for innovation activities that support partners with weak capabilities in cost reduction, production, quality, distribution, production technology and materials management, supporting them to develop improvement plans and conduct improvement measures in quality, delivery and distribution. As a result, participating partners showed a 9% improvement (average among 4 partners) in capability assessment. The manufacturing execution system (MES) support project that was implemented in 2018 helped 8 partners establish MES in the entire production process of order-purchase-production-inventory-distribution management, which resulted in an improvement in productivity such as reducing manufacturing lead time and improving delivery rate. Amorepacific Group pursued 35 joint R&D projects in 2018, including performance sharing project that shares the performance of joint innovation agendas with partners, and provided KRW 650million in R&D funding.

Financial Support for Our Partners

To help our partners secure financial soundness, Amorepacific Group manages a Win-Win Partnership Fund worth KRW 18.9billion, which provides direct assistance. It added KRW 1.1billion in funding for Mutual Growth Fund, which provides loans at a lower interest rate jointly with the Industrial Bank of Korea (IBK), from the previous 4billion to 5.1billion. As of 2018, the Group also manages a KRW 390million Mutual Growth Investment Fund in support of strengthening partners’ capabilities. In April 2016, we revised our payment policy to ensure that all payments made to small and medium-sized partners, with whom we have a shared growth agreement, are made 100% in cash within ten days of receiving invoice. And in November 2018, we applied the same policy of payment and settlement to 56 additional small and medium-sized partners. Amorepacific Group manages mutual growth partnership loan and cash payment monitoring system so that improving the payment method to first-tier partners can lead to improved payment to second-tier partners. We also contribute to spreading the culture of shared growth by encouraging shared growth agreements between first and second-tier partners.

Support for Growth Infrastructure

Since 2015, Amorepacific Group has provided both manpower and financial support to 5 to 6 small and medium-sized partners every year for them to attend exhibitions held overseas to find ways to enter the global market. From 2017 to 2018, partners that took part in Cosmoprof Hong Kong signed ten new export contracts. Amorepacific Group preemptively established a plan to raise unit cost in order to lessen the burden from labor costs for partners following the minimum wage increase in January 2018 and to rationalize unit price of suppliers, raising unit cost by KRW 4.5billion in total for our shared growth partners. Through our Consortium for HRD Ability Magnified Program, established to provide training to employees of small and medium-sized partners and to facilitate a stable supply of talent, we opened 80 training courses and provided cosmetics industry-related training to 1,495 employees at 313 partners in 2018.