IBM Korea ignores outcry of sales agents

A good corporate citizen has two important objectives – first making profits through business activities and second, creating economic value and contributing to society through sharing the fruits of their enterprise.

In this regard, IBM Korea cannot be considered a good corporate citizen. The Korean arm of the U.S.-headquartered software giant may excel in the first task but seems to be lacking in fulfilling the other requirement.

Lately, it seems that IBM Korea is turning a deaf ear to the outcry of its core business partners as long as their hardship doesn’t hurt its bottom line. The U.S.-headquartered software giant is also ignoring the Korean government’s loud calls on big companies here ― regardless of state of origin ― to join forces in order to achieve “shared growth” between big firms and their small business partners.

Having such a suspicious view of the foreign-invested company is not surprising if you take a close look at an ongoing probe by the Fair Trade Commission (FTC).

The investigation started in May at the request of the KSTEC, a sales vendor of IBM Korea. The vendor headquartered in the outskirts of Seoul had sustained losses worth 6.1 billion won ($5.33 million) for accepting IBM’s alleged dumping of its software products for years.

IBM gave no compensation for the losses and furthermore twisted the dealer’s throat tighter by slapping a sales ban on KSTEC which had stockpiled products of another software firm IBM had taken over.

Experts and industry insiders said such high-handed sales practices are deeply rooted in the country’s software industry. This translates into many small software vendors here like KSTEC falling victim to what KSTEC President Lee Seung-do described as “IBM’s abuse of power.”

IBM attempted to cover losses of the vendor in late 2009. But the method it suggested was beyond acceptance to a company reeling in snowballing debts.

“IBM suggested that it will pay a higher sales commission if I decide to take the existing losses,” KSTEC head Kim said. In April, IBM Korea filed a suit against KSTEC, denying its obligation to compensate for the latter’s losses.

The American company continued to abuse its power against the small vendor even when the government switched its shared-growth campaign into higher gear last year. Unlike most companies becoming cooperative, IBM pressured the vendor into buying a package of new software for 84 million won in March last year and another one for 54 million won in June in the same year.

“It’s obvious that IBM Korea has ignored the government’s shared-growth campaign,” said an official at the Ministry of Knowledge Economy. The official said the ministry will not take any measures against IBM, citing that the nature of campaign is voluntary participation by firms. But the official stressed that coming up with ways for co-prosperity between big and small firms is an “irrevocable megatrend” at home and abroad.

Critics say this case well explains why IBM doesn’t appear in the latest rankings of the world’s most ethical companies by the New York-based think tank Ethisphere Institute, despite the firm’s supremacy in the software business and the handsome paychecks of employees.

IBM Korea has refused to comment on all issues involving the KSTEC, citing internal policy. <The Korea Times/Park Si-soo>

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