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The World’s 5th Largest Chemical Industry Close
The World’s 5th Largest Chemical Industry

Korea's chemical industry is huge, ranking 5th in the world in terms of shipments. The industry boasts a size of USD 158 billion and accounts for 4.0% of the global market. The ethylene production capacity of Korea, which is a standard for measuring the production capacity of a chemical industry, ranks 4th in the world. In 2020, Korea produced 9.81 million tons (5.1%) of the world’s 194.1 million tons of ethylene. Among the ICIS Top 100 Chemical Companies (ICIS, September 2021), five Korean chemical companies are listed, which are LG Chem, Lotte Chemical, SK Global Chemical, Hanwha Solutions, and GS Caltex.

Korea's fine chemical industry, which includes downstream industries that can sufficiently receive stable and high-quality raw materials, has a capital/knowledge/technology-intensive structure. The industry produces core materials and application materials for various upstream industries, such as secondary batteries, automobiles, and displays. The fine chemical industry has been continuously growing, thanks to the steady growth of diverse global upstream industries.
Ethylene Production Capacity in 2020 World 194.1(Unit: million tons/year)

US 20.6

China 16.6

Saudi Arabia 9.1

Korea 5.1

Iran 3.8

India 3.8

※ Source: Korea Petrochemical Industry Association
ICIS Top 100 Chemical Companies in 2021

6th: LG Chem

23th: Lotte Chemical

43th: SK Global Chemical

73th: Hanwha Solutions

76th: GS Caltex

※ Source : ICIS

Expectations for Continued Growth Based on Various Upstream Industries and Export Growth Open

Expectations for Continued Growth Based on Various Upstream Industries and Export Growth

Korea is a manufacturing powerhouse with major chemical downstream industries, such as automobiles, electrical and electronics, textiles, construction, and plastics. On this basis, the fine chemical industry has also grown over the years. The Korean chemical industry’s largest export market is China. Exports beyond East Asia, such as Germany and the US, have continuously grown as well. Exports in 2020 recorded USD 29.95 billion (based on MTI 22) and surpassed imports, as production and domestic demand continued to grow.

The global fine chemical market is a promising market that is expected to grow from USD 180.9 billion in 2021 to USD　238.7 billion by 2025, showing a high annual growth rate of 7.2%. The rapid growth of materials for displays, semiconductors, LCD/LED, and secondary batteries had led to the expansion of investment in Korean companies, such as LG Chem, SK Innovation, Lotte Fine Chemical, Hanwha Solutions, and Kumho Petrochemical.

A total of 348 educational and training institutes, including KAIST and POSTECH, have established chemical-related departments, and over 30,000 highly skilled workers are produced every year. The national research infrastructure will be expanded from 18 to 51 establishments in order to strengthen the infrastructure for materials, parts and equipment. Since 2015, the proportion of researchers and testers among industrial technical personnel in the chemical field has risen to 25.3% of all chemical industry workers, which is an average annual increase of 8.3% over three years. Production-related occupations, such as operators and assembly workers, have decreased by 0.6%. The proportion of highly skilled workers is continuously increasing.

"Major Upstream Industries in Korea"

Major Upstream Industries in Korea Key Industries, Global Status and Major Companie’s Status
Key Industries	Global Reputation and Status of Major Companies
Automobiles	World's 5th largest automobile producer (3.51 million units, 2020) Exports of eco-friendly vehicles continue to increase to 276,000 units, accounting for 19.1% of total exports, stabilizing and increasing demand for specialty chemical materials required for electric vehicles and hydrogen vehicles
System Semiconductors	Samsung Electronics plans to invest USD 114.3 billion to become no. 1 in system semiconductors by 2030. Soaring demand for specialty chemical materials, due to the complex structure and precision design of system semiconductors
Displays	No. 1 market share in the display market (2020) OLED panels achieved exports of USD 10 billion for three consecutive years, accounting for over 60% of total exports, and maintained the no. 1 position in the global market
Secondary Batteries	Among domestic secondary batteries, small secondary batteries for IT have been ranked first in the world since 2011. Medium and large secondary batteries for electric vehicles are also closely following China Securing the technology to supply secondary batteries to global electric vehicle companies; LG, Samsung, and SK are at the top of the global EV market share

※ Source: Korea Petrochemical Industry Association, Korea International Trade Association
※ Note: Production (Left) / Domestic demand (Left) / Exports (Right) / Imports (Right)

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Foreign Companies Entering Korea In Response to the Demand from Large Upstream Industries Open

Foreign Companies Entering Korea In Response to the Demand from Large Upstream Industries

Global chemical companies that have entered the Korean market supply high value-added products in response to the demands from large upstream industries (semiconductors, secondary batteries, electric and electronic). In the case of foreign direct investment, the chemical industry was recorded as the industry receiving the highest amount of investment in the manufacturing industry with a reported amount of USD 777.9 million. Investments were actively made mainly in Asia, in particular, of which China invested the most with USD 390 million, and Europe also made a big investment, led by Germany.

Companies from various countries, including Japan, Germany, Switzerland, and China, have entered Korea as a sole corporation or joint venture. They are actively engaged in business activities in various fields, such as functional coatings/films, secondary batteries, engineering plastics, and semiconductors.

"Major Global Companies in Korea"

Major Global Companies in Korea Country, Mother Company, Location, Major Products
Country	Mother Company	Location	Major Products
Switzerland	Oerlikon balzers	Gyeonggi Pyeongtaek	PVD, PACVD, base coating, coating equipment
Japan	Lintec	Gyeonggi Pyeongtaek	Adhesive film, film for semiconductors
Japan	Toray	Gyeongbuk Gumi, Jeonbuk Gunsan	Battery separator film for secondary batteries
China	GEM	Gyeongbuk Pohang	Lithium secondary battery anode material precursor
Germany	BASF	Gyeongbuk Gimcheon	POM(Polooxymeltylene)
Germany	Merck	Gyeonggi Anseong	Semiconductor packaging, thin film coating, liquid crystal material
Belgium	Umicore	Chungnam Cheonan	Secondary battery cathode material
Belgium	Solvay	Jeonbuk Gunsan	Advanced eco-friendly silica for tire manufacturing
US	Air Products	Gyeonggi Pyeongtaek	Manufacturing industrial gas

Actively Fostering of the Material, Parts, and Equipment Industries and Support for Upstream Industry Development Open

Actively Fostering of the Material, Parts, and Equipment Industries and Support for Upstream Industry Development

The Korean government is working hard to resolve business difficulties and stabilize the supply chain.
The government supports core strategic technology information and legal analysis services through the materials, parts, and equipment policies to help companies throughout the entire process of attracting investment. In the case of the acquisition of overseas subsidiaries, 10% of the acquisition amounts are tax deductible, and support for technology internalization of up to KRW 1 billion is provided for three years to companies securing technology through M&A. A total of KRW 194.95 billion will be supported for new R&D projects under the 2021 Materials and Parts Technology Development Project (February 1, 2021), which is a follow-up project. The chemical industry will receive the biggest budget, KRW 46.01 billion, for 46 projects.

The government established the 2030 K-Battery Development Strategy (July 2021) for the development of the secondary battery industry. The private sector will invest KRW 40.6 trillion by 2030 to develop element technology for materials, parts, and equipment, and a large-scale preliminary feasibility study is being pursued.
As the secondary battery technology will be designated as a national strategic technology, tax credits will be strengthened to provide tax credits to R&D (up to 40-50%) and facility investment (20%). For the semiconductor industry, demand-linked R&D for system semiconductors (KRW 30 billion every year), exclusive fund of fabless (KRW 100 billion), and tax credit sunset extension for facility investment will be offered. Over KRW 1 trillion will be invested in the next-generation semiconductor technologies, including AI semiconductors, over the next decade.

"2021 New R&D Budget in the Material, Parts, and
												Equipment Projects"

Defense - 3.8%, Energy - 11.4%, Semiconductors - 12.9%, Displays - 16.3%, Basic Chemistry - 23.6%, Machinery Metals - 17.5%, Electrical and Electronic - 7.6%, Automobiles - 6.6%

2021 New R&D Budget in the Material, Parts, and Equipment Projects Category, Number of Projects, Budget
Category	Semiconductors	Displays	Electrical and Electronic	Automobiles	Machinery Metals	Basic Chemistry	Energy	Defense	Total
Number of Projects	26	23	17	13	28	46	22	5	181
Budget (KRW 100 million)	251.0	317.3	148.8	115.6	340.8	460.1	221.6	74.3	1,949.5
Budget (KRW 100 million)	12.9%	16.3%	7.6%	6.0%	17.5%	23.6%	11.4%	3.8%	100.0%

※ Source: Ministry of Trade, Industry and Energy
※ Source: 2021 Material and Parts Technology Development Project

Establishment of Fine Chemical Industry Clusters and Designation of Materials, Parts, and Equipment Specialized Complex Open

Establishment of Fine Chemical Industry Clusters and Designation of Materials, Parts, and Equipment Specialized Complex

The fine chemical industry cluster can be divided into the metropolitan area, Yeongnam area, and Honam area. Fine chemical clusters are located together around Ulsan, Yeosu, and Onsan industrial complexes. The local government provides support through the Chemistry Research Center, Chemistry Support Center, and the low-carbon intelligent material and parts industrial complex.

Through the designation of a specialized complex for materials, parts and equipment (February 23, 2021), the government gathers key materials, parts, and equipment demand-supply companies and infrastructure. Clusters are created to serve as factories for high-tech industries worldwide. Among the five designated specialized materials, parts, and equipment complexes, Yongin Semiconductor Cluster, Ochang Secondary Battery Industrial Complex, and Cheonan/Asan Display Industrial Complex and three techno valleys serve the chemical upstream industries. R&D in complementary fields, export support, professional researcher support, and investment incentives are provided through value chain analysis.

The secondary battery materials, parts, and equipment specialized complex houses a number of chemical companies, which are involved in the production of cathode materials, electrolytes, and separators, and work hard to strengthen the supply chain. A lithium-ion battery ecosystem is created to provide support for more active growth of companies.

"Secondary Battery Materials, Parts, and Equipment
												Specialized Complex"

※ Source: 2030 secondary battery industry development strategy

"Main Content by Region"

"Distribution of Secondary Battery Factories"

※ Data provided by: Korea Institute for Industrial Economics and Trade

"Three Chemical Industrial Complexes in Korea"

※ Source: Korea Petrochemical Industry Association (KPIA)

"Major Investment"

Major Investment Year, No, Investor, Field, Investment Location (in Korea), Reasons for Investment
Year	No.	Investor	Field	Investment Location (in Korea)	Reasons for Investment
2019	1	A社 (US)	General chemistry	Chungnam Cheonan	Industrial gas plant expansion
	2	S社 (Belgium)	Special chemistry	Jeonbuk Gunsan	Eco-friendly tire materials production plant expansion
	3	U社 (Belgium)	Secondary batteries	Chungnam Cheonan	Secondary battery materials production plant expansion
2020	1	H社 (China)	General chemistry	Jeonnam Gwangyang	Aluminum factory construction (Utilize FTA export model)
	2	T社 (Japan)	Special chemistry	Gyeongbuk Gumi	Advanced materials plant expansion (carbon fiber)
	3	N社 (China)	Secondary batteries	Chungbuk Chungju	Secondary battery cathode plant construction
2021	1	A社 (Australia)	Strategic resources	Chungbuk Ochang	Rare earth and rare metal plant construction
	2	R社 (US)	Special chemistry	Jeonnam Yeosu	Eco-friendly adhesive plant construction through JV
	3	H社 (China)	Secondary batteries	Jeonnam Gwangyang	Battery recycle plant construction through JV

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Recommendation on Locations

BEST1

[Chungcheongbuk-do Chungju City]

Manjeong General Industrial Complex

Designated area(m2) : 50,401
Management : Chungcheongbuk-do Chungju City
Nearby Railway : Dalcheon Station (5km)
Nearby Airport : Cheongju International Airport (51km)

BEST2

[Ulsan Metropolitan City Nam-gu]

Ulsan Techno General Industrial Complex(Ulsan Free Economic Zone)

Designated area(m2) : 1,286,977
Management : Ulsan Metropolitan City
Nearby Railway : Taehwagang Station (9km)
Nearby Airport : Ulsan Airport (15km)

BEST3

[Jeollabuk-do Gunsan City]

Imphi Agricultural Industrial Complex

Designated area(m2) : 239,156
Management : Jeollabuk-do Gunsan City
Nearby Railway : Daeya Station (7km)
Nearby Airport : Gunsan Airport (31km)

BEST4

[Chungcheongnam-do Yesan County]

Yesan New Material General Industrial Complex

Designated area(m2) : 483,670
Management : Chungcheongnam-do Yesan County
Nearby Railway : Sillyewon Station (22km)
Nearby Airport : Cheongju International Airport (87km)

BEST5

[Busan Metropolitan City Gijang County]

Busan New Material General Industrial Complex

Designated area(m2) : 255,229
Management : Busan Economic Promotion Agency
Nearby Railway : Busan Station (47km)
Nearby Airport : Gimhae International Airport (48km)

BEST6

[Jeollanam-do Mokpo City]

Ceramic General Industrial Complex

Designated area(m2) : 116,361
Management : Jeollanam-do Mokpo City
Nearby Railway : Mokpo Station (5km)
Nearby Airport : Muan International Airport (36km)

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