Kim Jae-ik, CEO of KG Chemical, has outlined plans to expand overseas operations, particularly in Southeast Asia, as the domestic fertilizer market reaches saturation. The company aims to restructure its existing fertilizer and chemical materials business around high-value products while developing tank terminals and eco-friendly energy infrastructure as new revenue sources.
In an interview with Aju Economy on July 22, Kim stated, "The domestic fertilizer market has entered a mature phase, making it difficult to sustain growth with existing products alone. We have set an ambitious goal to increase the share of overseas fertilizer sales to over 50% by 2030 and are fully committed to this challenge."
Founded in 1954, KG Chemical has produced essential chemical products for agriculture and industry, including fertilizers, concrete additives, water treatment agents, and automotive urea solutions.
Kim plans to leverage the company's 70 years of manufacturing capabilities, quality control experience, and raw material procurement skills to explore international markets. He noted the growing demand for organic, microbial, and crop-specific fertilizers in Southeast Asian countries like Vietnam, Indonesia, and Cambodia, where agriculture plays a significant role.
"The Southeast Asian market is not just seeing an increase in fertilizer consumption," he explained. "As interest in agricultural productivity, soil improvement, and eco-friendly agricultural materials rises, there is a growing demand for products tailored to specific crops and soil conditions rather than generic products."
He added, "Local farmers and partners do not only seek low-priced products; they prioritize improvements in yield and soil health, as well as the ability to cultivate crops sustainably over the long term."
KG Chemical is pursuing a strategy of supplying different product lines tailored to the crop and soil conditions of each country. In Vietnam, the focus is on organic fertilizers; in Cambodia, on microbial fertilizers; and in Indonesia, on specialized fertilizers for palm plantations.
Kim identified Vietnam as the market with the most immediate potential for success, stating, "We are currently exporting over 3,000 tons of organic fertilizers to Vietnam each month. In the short term, we expect to see visible results there first, while we have high growth expectations for Indonesia and then Cambodia in the medium to long term."
He emphasized that the overseas fertilizer business cannot simply rely on increasing shipment volumes. "Product registration, quality control, logistics, local distribution, technical sales, and after-sales service must all be interconnected," he said.
Once overseas sales reach a certain scale, the establishment of local production facilities will also be considered. Currently, there is sufficient capacity to export products produced at the Ulsan plant, but if volumes increase significantly, local production may be necessary to account for logistics costs and local climate conditions.
Kim noted, "Fertilizers are sensitive to moisture, so in Southeast Asia, which has a long rainy season, quality issues can arise during long-distance transport. Once export volumes reach a certain level, we will need to consider producing semi-finished or finished products locally."
However, he acknowledged that rising raw material and shipping costs pose challenges to expanding overseas operations. Most raw materials for fertilizers used domestically are imported, meaning that the company must import raw materials and then export finished products. If both exchange rates and shipping costs rise simultaneously, the cost burden increases significantly.
Kim explained, "There are almost no core raw materials for fertilizers that can be sourced domestically, so we rely heavily on imports. Even if we purchase raw materials at high prices to produce products, it is difficult to fully pass on the increased costs in overseas markets."
He added, "Chasing cost competitiveness alone can lead to a decline in quality, so we must balance quality and cost. We are currently securing a certain level of profitability in exports by leveraging our long-accumulated capabilities in procurement, production, and quality control."
Kim identified 'profitability-focused restructuring' as a key management goal for this year. With the domestic fertilizer market stagnating and seven companies competing for a limited market, the profitability of generic fertilizers continues to decline. He stated, "It is difficult to secure profitability by competing solely with standard products. KG Chemical will expand its technology-driven organic, microbial, and crop-specific products and connect them to overseas markets."
In the chemical materials business, the company is also pursuing cost reduction and production efficiency. Improvements in raw material purchasing methods and reductions in energy consumption are being implemented, along with the promotion of automation and data accumulation in production processes.
At the Ulsan plant, groundwork for process automation has begun. Instead of overhauling the entire aging facility at once, improvements are being made to individual process units, and data is being accumulated to create an environment suitable for future AI-based production management systems. Kim stated, "Since last year, we have been investing in process automation, and this year we are preparing to systematically accumulate production data to facilitate future AI integration."
The focus of factory automation is on improving safety and productivity rather than reducing workforce numbers. Kim noted, "There is actually a strong demand for faster automation to reduce repetitive and labor-intensive tasks. Enhancing production efficiency and ensuring worker safety are both critical reasons for pursuing automation."
KG Chemical is also developing energy infrastructure as another growth pillar alongside fertilizers and chemical materials. The company is pursuing a tank terminal business to store liquid cargo, leveraging idle land at the Ulsan plant and the group's eco-friendly fuel business.
Kim emphasized, "The tank terminal is not only a new business for KG Chemical but also connects to the group's eco-friendly energy value chain. It can serve as a foundation to mitigate the volatility of the existing chemical business and create stable cash flow."
He added, "We will not simply lease storage facilities for profit; we will strengthen the group's eco-friendly fuel and energy storage and logistics systems. By collaborating with the group's eco-friendly fuel affiliates, such as KG Eco Solutions, we can enhance logistics stability, cost management, and operational efficiency without relying solely on external infrastructure."
Kim stressed that KG Chemical's restructuring is not just about improving individual company performance. It aims to provide a material and infrastructure foundation that connects to the group's initiatives in eco-friendly mobility and energy.
He stated, "To strengthen the value chain of eco-friendly mobility and energy, it is essential to connect finished vehicles, materials, and energy infrastructure. KG Chemical can play a role in the chemical materials and energy infrastructure sectors."
He concluded, "Most importantly, maintaining a balance between stability and growth is crucial. We will carefully and steadily pursue investments toward future markets while upholding the fundamentals of safety, quality, and cost competitiveness in manufacturing."
* This article has been translated by AI.
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