Technological Leak

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The Fair Trade Commission has found that a famous Korean maker of electric wet-mops leaked technological secrets of its subcontractor. The company's operating margin once surpassed 20 percent. Yet, it didn't balk at leaking the technological secrets of its much-smaller subcontractor, whose operating margin is just over 2 percent, only in order to cut its product prices.

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The electric wet mop maker Honors launched its rotational wet mops in 2011 and had sold more than one million of them as of last year. The company's sales surpassed 30 billion won at one point. In 2014, even the minister of trade, industry and energy personally visited the company to laud its success in setting an example for other small and mid-sized firms. However, the Fair Trade Commission has found recently that Honors stole the technological secrets of its subcontractor to manufacture the core component of its electric wet mops. Since 2015, Honors received 18 technological documents from its main subcontractor on the power control device, one of the key components. It later passed on seven of the documents to the main subcontractor's eight rival firms. The rival firms drafted price estimates for the component in question based on the documents, which Honors used later to pressure its original subcontractor by showing the cheaper prices of its rivals.

[Soundbite] CEO of Subcontractor Firm(voice modified) : "We had no other choice but to accept their demands because they threatened they would not buy our products unless we lowered the price."

The Fair Trade Commission says that Honors has committed a serious violation of the Subcontracting Act by abusing the technological information of its subcontractor.

[Soundbite] Sung Kyung-je(Fair Trade Commission) : "Honors said it demanded technological data from its subcontractor in order to consider the appropriateness of its prices and inspect its products. However, the FTC has ruled that neither was legitimate enough."

The Fair Trade Commission has levied a 500-million-won fine on Honors for technology theft and will indict three of its executives, who are biological brothers, as well as the entire company.