Invest KOREA

For almost two decades, Toray Advanced Materials Korea has been working closely with local companies to further contribute to Korea’s economy

When it comes to innovation and creativity, there’s no place like Korea. With the country’s ratio of research and development (R&D) spending to GDP ranking first place, a number of foreign companies have established research centers in Korea. One of these companies is Toray Advanced Materials Korea (TAK), an affiliate of Japan’s Toray Group.

Since 1999, the company has been a leading chemical materials supplier in Korea, producing everything from basic household items to industrial components. Thanks to the country’s optimum R&D environment, TAK set up a technology research center in 2000, only one year after the company was founded. In 2004, it established the Advanced Materials Research Center (AMRC) to spur technological innovation.

Despite being the undisputed leader in advanced materials, the company has its eye on a far bigger market. In July, TAK built the world’s first integrated production line in Saemangeum Industrial Complex, capable of producing 8,600 tons of polyphenylene sulfide (PPS) resin and 3,300 tons of compound per year. The company also has been running 3 plants for polyester films, high functional processed films for IT, carbon fibers, spunbond nonwovens, polyester filaments and resins in Gumi, North Gyeongsang Province.

In a recent interview with Hae Sang Jeon, TAK’s Vice President and Chief Operating Officer (COO), we find out more about the company’s future vision as an innovation leader.

What are some of the strengths of the Korean market when it comes to doing business?

From the initial review stage, we look into various factors and think about the value chain before doing business in a country. Since Korea is home to a number of world-class companies, it provides abundant opportunities for mutual cooperation and joint development. This brings huge benefits for both the supplier and consumer.

Korea’s manufacturing sector is highly competitive, boasting world-class industries in the areas of display, mobile phones, electronics and automobiles. Such manufacturing prowess is attributed to strong chemical, component and steel industries because high-quality materials make quality finished goods. That’s why Korea is a significant market for material suppliers like us.

It’s very easy to expand to other international markets thanks to the country’s vast FTA network, which covers 75% of the global economy. Korea is also located near accessible markets with a high potential for demand. A well-educated and highly qualified workforce is another compelling reason to do business in Korea.

Is there something Korea can do to be more ideal place for investment and business?

The contribution of foreign investment to the Korean economy is increasing every year; case in point, this year’s foreign investment reached a record high, according to a media report. This is a clear testament that Korea’s business environment is improving.

But there’s still a room for change. We hope the government’s drive to reform the labor market will create jobs and enhance labor market flexibility and in turn, make businesses more competitive. This is particularly important when the Korean economy is burdened by rising production costs, strict labor market regulations and increasing infrastructure expenses. As Korea is highly dependent on exports, there is growing concern that such increase in costs may drag down the country’s competitiveness.

How is Toray strengthening business partnerships with domestic companies?

Toray Group takes a long-term approach in conducting business in Korea and wants to contribute to industrial development and technology advancement. As such, we’ve been building strong partnerships based on trust with Korean businesses.

The material industry doesn’t develop in a vacuum. It grows in a chain of cooperation connecting the front-end and back-end industries. We value our partnerships because we firmly believe that new industries and new markets can be created only when raw material suppliers, equipment and materials manufacturers and producers of finished goods all work together.

What are your future plans for the Korean and Northeast Asian market?

Toray Advanced Materials Korea will step up efforts to further sharpen our competitive edge and concentrate our investment on high value-added materials.

Through additional investment, we aim to double our annual production capacity of PPS from the current 8,600 tons a year. Our ultimate target is to hold more than 50 percent of market share in Korea. We also want to enhance our market dominance by fully utilizing the FTA network in Northeast Asia.

In a bid to secure new growth engines, we broke ground for Gumi Plant 4 at the Gumi High-tech Valley National Industrial Complex in North Gyeongsang Province on October 19, 2016. A total of KRW 425 billion (USD 374.9 million) will be injected by 2021 to further expand our business. We will mainly focus on new materials but also plan on building manufacturing facilities for nonwovens, carbon fiber composite materials and PET films.

Toray has recently built a new plant in Saemangeum. Why did you choose Saemangeum as a business site?

By building a production facility in Saemangeum, we can reduce logistics cost by sourcing basic ingredients of PPS from nearby cities like Gusan and Yeosu. We can also forge strategic partnerships with a large number of auto part makers in the area, our prospective clients for light-weight materials. We were also attracted to the excellent talent pool available in the region.

Geographically, Gusan can serve as a business hub because it’s centrally located among Korea, Japan and China. The FTA between Korea and China provides another reason for doing business there. As the Korea-China FTA became effective at the end of last year, tariffs, which stood at 6.5 percent before the conclusion of the FTA, will be reduced by 1.3 percent every year; by 2019, tariffs will be completely eliminated. Along with such favorable conditions, Saemangeum is located very closely to China, which cuts time and cost for businesses. Additionally, there are various benefits for companies moving into the foreign investment zone, such as free land leases and tax exemptions.

What do you want to tell foreign companies who look to tap into the Asian market?

Korea is an attractive investment destination which has a broad range of strategic partnerships with multinational companies, an extensive FTA platform and excellent human resources. Supportive central and local governments are ready to help foreign companies and provide various incentives for investment. Ever since Toray Group extended its reach to Korea in 1963, we have continuously expanded our business here because we are confident about Korea’s potential for future growth.

By Esther Oh (estheroh@kotra.or.kr)
Executive Consultant/Invest Korea