Leading South Korean chemical materials manufacturer Kolon Industries Inc. has finalized a strategic tie-up with SK Microworks Co. as the former seeks to retake the upper hand in the fiercely competitive global industrial film market now dominated by Chinese rivals. The partnership calls for the creation of a joint venture for the development and production of industrial films that will unite two of South Korea’s leading industrial filmmakers.
The firms signed a memorandum of understanding to form a joint venture worth around 300 billion won ($225 million) out of SK Microworks, the world’s No. 4 industrial film manufacturer and a subsidiary of Hahn & Co., in the latest move by both companies to rejuvenate their key film businesses after difficult market conditions. Its new unit — to be run by SK Microworks — emerges as Kolon Industries has been exploring ways to turn its money-losing industrial film division around, which has racked up significant operating losses in recent years, while the now-profitable SK Microworks navigated uncertain global demand for its optical films by Chinese companies undercutting the market with cheaper alternatives.
The announcement comes amid a rush by major South Korean chemical companies to shed their traditional film businesses and redeploy resources to newer growth areas. SKC Ltd. in December redirected proceeds from its film division sale to Hahn & Co. so its electronic materials unit could expand its battery materials business.
The joint venture fits with a broader industry trend that will see chemical firms from South Korea liquidate their film businesses in favor of emerging growth areas. SKC, an affiliate of South Korean conglomerate SK Group, on Dec. 23 announced it had sold its film division to Hahn & Co. for 352.25 billion won so it could focus on its battery materials business.
The tie-up between Kolon Industries and SK Microworks is as timely as it strategic, geared toward an investment in high-value, eco-friendly materials, the groups said, creating both a more dominant industrial film market player and one better insulated from having to price-compete with Chinese rivals. Their alliance aims to secure a bigger slice of the global industrial films pie, which will be worth $55.8 billion in 2023, driven largely by the Asia-Pacific electronics and automotive industries, according to Zion Market Research data cited by Market Research Gazette, by leveraging innovation and sustainability as the future industry’s twin keys to success.
