Woongjin Chemical
It is becoming more and more likely that Woongjin Chemical, which has the finest water treatment filter-related technologies in the world, will be acquired by a Japanese company. Under the circumstances, concerns are on the rise that Korea could become a mere production base without R&D capabilities in the industry, in spite of the national budget investment in it.
According to industry sources, Toray Advanced Materials proposed 430 billion won (US$397 million) as its tender price in the bidding on September 10, which was higher than the prices suggested by LG Chem, GS Energy, and Unid. As such, Toray Advanced Materials is expected to make the preferred bidder for Woongjin Chemical, which is a subsidiary of Woongjin Holdings, which is in a workout program now.
Experts are pointing out that not only the price side, but also matters like the protection of advanced technologies be taken into consideration, with Toray and Woongjin Chemical vying fiercely with each other for the third spot in the global reverse osmosis (RO) filter market. “If the technologies accumulated by Woongjin were handed over to Japan, Korea’s industrial competitiveness would be greatly affected down the road,” said one of them. RO filter development had been designated as a national project from its first stage.
Woongjin Chemical, which recorded 1.11 trillion won (US$1.03 billion) in sales and 28.5 billion won (US$26.3 million) in operating profits last year, is the number one RO filter manufacturer in Korea. It developed its first RO filter on its own back in 1994, and has developed micro filters and ultra filters since then to account for over 60% of the local market. It has exported a large quantity of water treatment filters to many countries, including the United States. In addition, its products have won a number of awards, including the Prime Minister Award and the Korea New Growth Potential Management Prize.
The global RO filter market is estimated to be 1.1 trillion won (US$1.016 billion) in size as of now, with Dow Chemical and Nitto Denko taking up 32% each. They are followed by Toray (11%) and Woongjin (11%). The market is likely to grow at an even faster pace with time as a key technology for seawater desalination projects.
Woongjin Chemical took a pivotal role in the national seawater desalination project in which the national R&D budget of 95.5 billion won (US$88.2 million) was invested since 2006. It continued with its research activities for six years, and finally completed the development of highly functional RO filters and modules in April last year to make inroads into the global market, which had been led by US and Japanese companies. More recently, it succeeded in developing top-notch forward osmosis membrane filters.
Once the Korean company is taken over by Toray, such research outcomes end up in the hands of Japan, which means the future growth driver loses its momentum. However, Toray is refuting such claims by saying that it is already in possession of cutting-edge technologies in the field, and thus it is unfair to brand itself as a technology thief.
“We’ve continued our investment in Korea all the way since 1963, when we provided fiber-related technologies for KOLON, and have closely cooperated with Samsung, KOLON, and many more,” it emphasized, adding, “Besides, we’re participating in a water treatment project led by the Ministry of Environment of Korea.” It went on, “We’re expecting that the acquisition will result in a great synergy effect, as Toray Advanced Materials is the successor to Toray Saehan, which was formed by the Toray Group and the predecessor of Woongjin Chemical through a 60-40 equity investment.”