**Seoul**: A recent report highlights the Korean precision chemical industry’s lower competitiveness compared to global leaders, calling for governmental support in product localization, digital transformation, and green technology to enhance its standing and address critical gaps in scoring and capabilities.
The competitiveness of the Korean precision chemical industry has been highlighted as significantly lower in comparison to industry leaders such as the United States, Germany, and Japan, according to a report released by the Korea Institute of Industrial Technology on the 12th of October. The report, titled “Diagnosis of Competitiveness of the Korean Precision Chemical Industry and Implications,” has underscored an urgent need for governmental policy support to address issues in core product localization, digital transformation, and the expansion of green infrastructure.
In the analysis, which was informed by expert interviews and a competitiveness survey using a five-point scale, the Korean precision chemical industry received an overall score of 2.8 points. This is markedly lower than the 4.1 points attributed to leading countries in the sector, signalling a need for strategic improvements.
The report detailed several critical gaps in specific categories: supply chain restructuring (2.75 points), digital transformation (2.75 points), green transition (3.25 points), and demographic changes (2.5 points). It was indicated that in supply chain management, Korea experiences a notable technological gap when juxtaposed with global leaders at 4.5 points, highlighting a significant reliance on foreign sources for essential raw materials. While there has been progress in localizing some materials since Japan’s export restrictions came into effect in 2019, many precision chemical products continue to come from overseas due to fierce global competition and challenges in performance efficacy.
Furthermore, the report identified a pronounced shortfall in digital transformation capabilities relative to international counterparts. Unlike major chemical companies in Europe and the US that are implementing advanced smart manufacturing systems through substantial investments, the pace of digitalisation in Korea has remained sluggish, particularly among small and medium enterprises, with only a few larger companies making headway.
Lee Sang-won, a deputy research commissioner at the institute, commented, “Despite Korea having excellent IT capabilities, the slow digital transformation within the precision chemical industry is due to the initial investment burdens on small businesses and a lack of skilled personnel.” He added that there is a pressing need to bolster support for the adoption of smart manufacturing and data-driven technologies.
In the green transition area, the report revealed that, despite some governmental backing and increased corporate investment, South Korea still lags behind leading nations. Acknowledging the challenges posed by climate change, the report advocated for significant investments in environmentally friendly technologies, especially in research and development for bio-based chemical materials and recycling technologies to achieve carbon neutrality.
Demographic shifts also contribute to concerns about productivity, as the report noted an anticipated reduction in the workforce due to low birth rates and an ageing population, which could severely impact the industry.
In light of these findings, the Korea Institute of Industrial Technology has made several policy recommendations. These include special management of product groups heavily reliant on foreign raw materials, customised R&D support tailored for various small-volume production processes, promotion of eco-friendly products, and improvement of digital capabilities for small and medium-sized enterprises.
The deputy research commissioner concluded, “In order for the Korean precision chemical industry to secure global competitiveness, it is essential to stabilize the supply chain, innovate digitally, and invest in the development of environmentally friendly technologies,” while also stressing, “Especially, customized support measures for small and medium-sized enterprises should be prepared, and an active strategy for entering global emerging markets should be pursued.”
Source: Noah Wire Services
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