This is an aerial view of LG's technology complex in Magok, western Seoul. The company plans to complete the complex by 2020. / Courtesy of LG Group
By Kim Yoo-chul
LG Group said Monday that it will award 400 billion won ($357 million) worth of contracts to smaller firms, in a bid to support the so-called shared growth initiative spearheaded by President Park Geun-hye and her administration.
The group also decided to invest a total of 3.2 trillion won to build a cutting-edge software development center in Magok, western Seoul, by 2020, up from an original 2.4 trillion won investment.
The move comes as part of the group's efforts to support the government's policies to support a creative economy and ensure co-growth between large firms and SMEs.
The government has placed top priority on creating new business chances and more jobs by combining information and communication technologies with the cultural and other sectors.
"We are ready to match President Park Geun-hye's creative economy drive. The latest investment will help grow the local software industry," group spokeswoman Kim Min-jeong said Monday.
Under the plan, the group will award system integration (SI) contracts worth 230 billion won, advertising deals worth 100 billion won and construction contracts worth the remaining amount to smaller firms.
In the SI sector, LG Group affiliates will directly offer 115 billion won worth of business projects to local suppliers, while the remaining 115 billion won will be put out to tender.
LG Group, which has LG Electronics, LG Display, LG Chem and LG Innotek as its key earnings drivers, will spend more on hiring talented engineers and technicians over next several years. They will be working at the new Magok complex.
"We will ask the Seoul Metropolitan Government to allow us to buy more land to build a bigger complex. We will invest 800 billion won more for the project by 2020 and the total research staff will be increased to 30,000 from the previous 20,000 after the complex opens," said the spokeswoman Kim.
Research and development (R&D) divisions at LG Electronics, LG Display, LG Innotek, LG Chem, LG Hausys, LG Life and Sciences, LG Uplus and four affiliates will be transferred there.
"LG will use the complex to develop market-leading projects and to find out the group's next cash-cows; but closely collaborating with local ventures, startups and suppliers. We will also offer internship programs to students and some of them will be offered regular jobs," she stressed.
In a related note, Samsung earlier said it will invest a total of 1.5 trillion won over the next 10 years to establish a new unit to develop patents for next-generation technologies.
The Samsung Future Technology Foundation will focus on developing materials, hardware and industry convergence-related technology.