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7. Win-win btw OEM and Supply Base through a Fair Trade

◆ It is difficult for Korean tier 1 suppliers to Tier 1 suppliers and customers status

make competitive parts and components, as Number 6 or
of OEMs 1 2 3 4 5 over
they are unable to sell them to multiple

OEMs under the business environment sorely Tier 1 424 219 98 65 48 29

controlled by each OEM, ‘a vertical
Ratio 48 25 11 7.4 5.4 3.3
manufacturing structure’. (%)

Tier 1 companies’ sales turnover
◆ Korean local tier 1 companies’ sales turnover
(trillion won)
was KRW 75.8 tril. in 2016, which had 80 75.8

remained steady since 2012. 75 73.8
70
◆ This is the main reason why it is hard to find 65

global parts manufacturers in Korea such as 60 2011 2012 2013 2014 2015 2016

ZF and BOSCH in Germany.

BUSINESS CONFIDENTIAL 8