South Korea’s largest steelmaker Posco will be upgrading its benefit sharing system, expanding opportunities for small and medium-sized enterprises and increasing performance compensations, the company said Thursday.

Pioneered by Posco in 2004, benefit sharing system is a joint cooperation between corporates and SMEs that provides a win-win scenario for both parties. Not only can SMEs utilize technologies of large corporates, but corporates can also improve its materials and secure a stable supply.

Posco has so far covered 4,742 projects and delivered a total of 366 billion won ($306 million) in compensations through this system. It provides SMEs with 50 percent of the incentives generated through joint projects and offers other perks such as long-term contract, positive supplier evaluation, and joint patent ownership, the company said.

Posco’s partnership with Hwa Sung Tech Win, a thermal energy engineering company, is a leading example of a benefit sharing system. Their development of internet of things-based sealed hot air drying facility has saved Posco 1.45 billion won in annual expenses and awarded Hwa Sung Tech Win with 107 million won in performance compensations.

Posco plans to expand the opportunity to more SMEs, increase the compensations, and improve the system to reduce the risk failure. It will also modify the system for businesses that carry out non-financial performances difficult to measure in monetary value. 

By Hyee-su cho(chohyeesu@heraldcorp.com)