LG Chem spurs China business with cutting-edge materials

LG Chem will ramp up its business in China by introducing high-value added cutting-edge materials to Chinese customers, the company said Monday.

The leading South Korean petrochemical manufacturer, who is the front-runner in the race for electric vehicle batteries, will bring about 90 kinds of new materials to the Chinese market by unveiling them at the biggest material exhibition in Asia, Chinaplas 2017, which runs from Tuesday through Friday. 

LG Chem is one of about 3,300 participating companies from 40 countries. It is set to run the largest booth at the event.

“The company will showcase smarter and lifestyle-friendly materials for automobiles, home appliances, smart devices and leisure products,” a company spokesman said. “To meet more customers and boost communication with them, we will double the number of meeting lounges from last year.”

The company made inroads into the Chinese market in 1995. It was the first Korean petrochemical firm to do so that year.

It currently operates a total of seven workplaces in China, including Huizhou, Chongqing, Jiangsu, Tianjin, Nanjing, Guangzhou and Yongxing.

Acrylonitrile-butadiene-styrene resin, known as ABS, and Polyvinyl Chloride, or PVC, are best-selling products preferred by Chinese automakers and consumer electronics makers in the market.

Owing to the smooth business in China and higher oil prices, LG Chem’s basic material division achieved the largest-ever quarterly operating profit of 733.7 billion won ($651 million) in the first quarter of this year.

“About a third of the company’s total sales comes from China, so it is the biggest and most important market for us,” said Park Jin-soo, vice chairman and CEO of the company, last month at a press conference. “The company will try to appeal to the market with our differentiated technologies and high-value added products.”

LG Chem announced an investment plan worth 1 trillion won for this year, which focused mainly on EV batteries and basic materials. Last year, it decided to expand production of ABS in Huizhou by 150,000 tons with an aim to enhance its position in the market.

Taking advantage of its longtime reputation as a petrochemical supplier, LG Chem hopes to preoccupy China’s emerging EV battery market.

Since 2015, the company has been attempting to penetrate the car battery market by establishing two battery plants in the country, but their operating rates remained below 50 percent as of last year, due to pressure on Chinese firms to refrain from partnering with LG Chem and other foreign battery makers, amid ongoing diplomatic tension between China and Korea.

“LG Chem will try to provide products and technologies that are incomparable to others, so such external conditions including regulations will not affect our business,” Park said.

By Song Su-hyun (song@heraldcorp.com)