Billions in Delays: Small Businesses Facing Bankruptcy as TMON and WeMakePrice Fail to Settle Payments

THREATENING THEIR SURVIVAL

The recent financial turmoil at TMON and WeMakePrice is plunging countless small businesses into severe economic distress. Vendors who rely on these platforms are grappling with massive unpaid sums, threatening their survival and potentially cascading through the supply chain.

On July 25, a growing crowd of aggrieved customers gathered at TMON's headquarters in Gangnam, Seoul, demanding refunds. A notable electronics and camera retailer, referred to as Company A, is among those suffering from the crisis. Despite delivering goods and taking out pre-settlement loans to cover the costs, Company A has yet to receive its 1.1 billion won payment for May sales, originally scheduled for June 22. This delay has compounded with unpaid funds from June and July, escalating the financial strain. The company’s representative expressed concerns about potential bankruptcy if the situation persists, despite the firm’s historically strong credit and profitability.

The payment delays at TMON and WeMakePrice are causing widespread panic among the approximately 60,000 vendors on these platforms, predominantly small and medium-sized enterprises (SMEs). The situation threatens the viability of many of these businesses, as the lack of timely payments disrupts their cash flow, affecting their ability to cover operational expenses and purchase inventory.

Particularly vulnerable are sellers in high-value categories such as electronics, home appliances, and travel services. The ongoing crisis has already led some businesses to shut down, unable to cope with the mounting unpaid sums. As of now, financial authorities estimate that the outstanding payments from TMON and WeMakePrice total around 1.7 trillion won. Company A’s representative reported that a neighboring firm has begun downsizing its workforce in an effort to mitigate the financial damage caused by the payment delays.

The crisis has broader implications, potentially impacting banks and other financial institutions. Many vendors rely on pre-settlement loans to manage their cash flow, with the loan amount typically based on expected settlement payments. With delays in these payments, many are struggling to meet their loan obligations, leading to defaults. The Financial Supervisory Service notes that pre-settlement loan amounts surged from 25.2 billion won in 2019 to 623.9 billion won in 2022, with Coupang and WeMakePrice being the largest borrowers.

The ripple effects are already being felt across the supply chain. For instance, a rice wholesaler who has not received approximately 500 million won in payments from TMON and WeMakePrice warned that the financial strain could lead to a collapse of rice mills and further hardship for farmers.

The ongoing payment delays at TMON and WeMakePrice are creating a severe financial crisis for thousands of small businesses. As vendors struggle with unpaid sums and mounting debt, the consequences are likely to extend beyond individual firms, potentially affecting the wider economy. Immediate action is necessary to resolve these issues and prevent further economic fallout.