Korea Pays 4 Tln Won in Process Technology Royalties Annually

KAIST professor calls for urgent steps to secure original process technologies

The Korean petrochemical industry boasts of its global standing as the world’s sixth biggest player in terms of the size of its production, but government steps need to be taken to rectify a practice of the nation’s extreme dependence on advanced foreign countries for process technologies necessary for the construction of petrochemical plants, a seminar has been told.
Prof. Woo Sung-il of the Korea Advanced Institute of Science and Technology (KAIST), told the spring session of the Green Technology Forum that the current process technology licensing market is dominated by such advanced countries as the United States, the United Kingdom, Japan, France and Germany, and even though 50 years have passed since the first importation of process technology, Korea still relies on imported foreign process technologies for building plants with annual royalty payments totaling 4 trillion won.
Prof. Woo said, “The reality of the Korean petrochemical industry is that firms build plants with foreign process technologies and pay out 1 percent to 2 percent of sales in royalties.”
Japan, which lags behind Korea in terms of production, makes the most of process technology licensing. Woo said Japan’s production of ethylene is lower than that of Korea, but Japanese firms take advantage of process technology licensing. For instance, Mitsui is gaining tens of millions of won in royalties from Korea, and some plants are being built using its technologies in the Middle East, he added.
Even the Chinese government is shoring up its massive support to secure original technologies and export industrial technologies in order to join the pack of process technology powerhouses.

On the other hand, Korea has few original process technologies, so the reality is that Korean firms participate in the construction of global plants as subcontractors, since firms, state-financed research institutes and universities fail to commercialize process technologies. The government’s lack of support is to blame, the professor said. The domestic petrochemical industry supplies industrial materials at cheaper prices without technologies, but Korea will have to reap profits through technology licensing in order to turn the tide, instead of through cost competition, he added.
Woo noted that a professional and practical process technology research institute should be established with the government taking the initiative in a bid to ensure technology reliability and effective development. France and China, with strong government support, have already established professional and practical process technology research institutes and successfully entered the industrial technology licensing market, he added.
In particular, he said, Korea’s securing of original process technologies on top of its existing strengths ― globally recognized plant operation and construction expertise ― would enhance the nation’s price competitiveness.
In this regard, Woo Tae-hee, director general for manufacturing industries at the Ministry of Knowledge Economy, said, “The process technology issue is related not just to the local petrochemical industry, but also nearly all industrial fields.” He said he will float the professor’s suggestions and will consider operating a task force to fix the issue.
Lee Dong-gu, head of the Ulsan New Chemistry Commercialization Center, and Yoo Ink-san, executive director of SK Energy, spoke about a roadmap for the upgrade and development of petrochemical complexes and the growth and limits of the Ulsan Petrochemical Industry, respectively. Lee Kyu-jung, executive director of Yeochun NCC Co., and Sohn Suk-won, executive vice president of Samsung Total, each lectured on the status and future plans of the Yeosu Petrochemical Complex and the direction of the Daesan Petrochemical Complex, respectively.
SK Energy’s Executive Director Yoo said the growth of the Ulsan petrochemical complex, which has hit against the wall, needs to be upgraded as German counterparts do. He urged the government to help the domestic petrochemical industry receive the same government support as the automobile and IT industries do.
MKE’s Director General Woo said the government will come up with a package of support steps. In regard with the introduction of carbon credits, views from the business community will be reflected through consultation with the government, he added.
In his opening speech, Rep. Kim Ki-hyun, co-chairman of the Green Chemistry Forum, said, “Even though the petrochemical industry has played leading roles in the nation’s economic development, the IT industry has recently been emphasized, whereas the petrochemical field has been overlooked as a has-been.” He said he will propose ideas and suggestions coming out of the seminar to make them policies in cooperation with the government and the National Assembly so that related firms can be given a hand to do business.
Korea Petrochemical Industry Association Chairman Hur Won-joon, concurrently co-chairman of the Green Chemistry Forum, said, “Industry, academia and research institute circles joined forces to explore ways of stepping up the global competitiveness of the local petrochemical industry and ensuring a structural shift, established the Green Chemistry Forum and organized the inaugural forum last December.”
In his commemorative speech, Oh Hun-seung, president of Korea Research Institute of Chemical Technology, said, “In 2010, a surge in new plants in China and the Middle East, which have been delayed or behind schedule, will likely bring about an oversupply and reduce profit margins, and this trend is forecast to continue, as many experts do, and environmental restrictions will be reinforced like REACH (Registration, Evaluation, Authorization and Restrictions of Chemicals) and climate change.” The Korean petrochemical industry will have to seize up new opportunities through endless restructuring efforts, he said.
Among those on hand at this year’s first session, organized by the Green Chemistry Forum, were Green Chemistry Forum co-chairmen - Rep. Kim Ki-hyun and Korea Petrochemical Industry Association Chairman Hur Won-joon -,; National Assembly Speaker Kim Hyong-o,; Rep. Hong Jun-pyo,; Rep. Chung Hae-gul,; Rep. Kim So-nam,; Rep. Bae Un-hee,; Rep. Lee Myung-gyu,; Yoon Min-jung, chairman of the Korea Union of Chemical Science and Technology Societies,; and Choi Kil-young, chairman of the Polymer Society of Korea. nw

Rep. Kim Ki-hyun, co-chairman of the Green Chemistry Forum, delivers an opening speech at the year’s first seminar of the forum.

Representatives from government, parliament, petrochemical industry, academia and research circles take a look at the current status and prospects of the petrochemical industry at the forum.