Korean petrochemical industry has begun as a branch of Korean government's economic development plan in 1970s.From its beginning the industry was in near monopoly under the protection of government and the member companies of near monopoly were enjoying the rapid growth in sales and profit.
But this changed from the late 1980s when large companies such as Samsung and Hyundai entered this industry following the 'Industry Development Act' published by government in 1986 and the opening of domestic markets for foreign petrochemical exporters.
These new companies grew rapidly throuth vertical integration in both upward and downward stream in order to obtain and maintain a share of the swiftly growing petrochemical market, owing to their enormous fund raising capacity.
The ones that were formerly members of monopoly also had to integrate backward to assure themselves of continuing supplies, for example, Daelim Industry, Honam Petroleum and Daehan Petrochemicals constructed naphtha cracking center(NCC) and Korean Oil Corporation constructed poly propylene(PP) plant and high density poly ethylene(HDPE) plant.
As a result, recent decade saw the oversupply in every petrochemicals, which set off hard competition for market share and in price by both old and new members of domestic oligopoly. Because of the overcompetition, export price was also lowered under the variable cost. With all these factors, the vast financial cost incurred from the heavy investment made the most petrochemical companies suffer from the increasing deficit of operation balance.
The purpose of this study is to find out the causes which weaken the competitive power of korean petrochemical industry and to suggest the ways and means which strengthen the competitive power of korean petrochemical industry.
