CQV paints the future of pigment development

In recent times, as the domestic landscape becomes increasingly saturated and competitive, it has become essential for Korean enterprises to think globally to sustain their growth trajectories. What challenges and opportunities do Korean suppliers face in the global supply chains, and what are the strengths of Korean companies?

Korea has developed at an extraordinary pace, largely due to its ability to follow and adapt quickly. This is in part thanks to the distinct characteristics of the Korean people, which enabled the country to join the ranks of advanced economies across various industries. However, as the market grew, it also became more saturated and competitive. Of course, trade barriers, environmental regulations, and patent issues have presented additional challenges. These are some of the key hurdles that Korean companies face today. Without the right technologies to overcome these challenges, survival can be difficult. This environment has shaped Korea's business landscape for the past two decades.

Korea’s strategic location places it in a delicate balance between China and the United States, which can be both an advantage and a disadvantage. In the past, Korea’s economy was dominated by large conglomerates, but the rise of SMEs has shown that smaller companies can also adapt well to the current landscape. Over the past few decades, there have been numerous instances of corporate restructuring, with some companies rising while others have fallen. I believe that the companies which endured and survived have honed their unique strengths and identified a clear path to continued growth and survival.

Korea’s business environment is dynamic—many companies are constantly established and shut down. This creates a cyclical process that fosters synergy. When a company fails, the employees who were part of that company often learn valuable lessons about the root causes of failure. Armed with this knowledge, they move to other companies, helping to develop new strategies and technologies to avoid similar pitfalls. This ability to rise from failure is a key driver of Korea’s positive growth trajectory.

Reflecting on my own experience, I began my career in the pigment industry 40 years ago, at a time when Korea’s industrial landscape was almost barren. We had to start from scratch. There were no external resources to help us; we had to build everything from the ground up. Twelve years later, the company I worked for failed because it lacked a new competitive edge, and it was acquired by a global firm. However, the Korean branch was shut down because it couldn’t compete. That’s when I decided to start my own company. The employees from the previous company came together to form the founding team of CQV, and we built our success on the technology and knowledge we had gained. This is a prime example of how even when companies fail, it can lead to the creation of new, successful ventures.

This cycle of rise and fall has been a constant throughout Korea’s history, contributing to our ongoing development. Korea has transformed into an advanced nation at an impressive pace, and many companies have joined the ranks of world-class enterprises. We are now at the forefront of innovation and are poised to lead globally.

Korean people possess the DNA for success—this is an intrinsic quality that cannot be easily extinguished. For example, even if I am no longer with CQV, I believe that the advanced technology, infrastructure, and experience our employees have gained will be more than enough to take the company to the next stage of development.

We are continuing on this journey, and it is the same for other companies, both domestically and internationally. Survival and growth are the starting points. In the past, survival simply meant adapting to market trends, but today, it requires special technologies and differentiated strategies to create and open new markets. Companies that fail to do this will struggle to survive.

Korean companies have been particularly adept at following and catching up with market pioneers. This ability has been instrumental in our development to our current state. However, to continue growing and reach the top, companies must develop their own distinct strengths. Without unique technologies, competitive advantages, and expertise, companies will find it increasingly difficult to survive. This applies to us as well. While we have been able to follow trends up until now, companies without clear goals, vision, and a strong drive for success will eventually fail. In that sense, the next stage of survival will require us to evolve further.

You mentioned how Korean companies aim to be pioneers by introducing new technologies and staying ahead of the competition in niche markets. CQV has steadily grown by developing and manufacturing pearlescent pigments, particularly mica-based products, for use in industrial, cosmetic, and automotive applications. Could you explain what is CQV’s niche market, and where you are focusing most of your R&D efforts?

Our primary focus is on high-value products and industries that add significant value. To penetrate these high-value markets, technological expertise is essential. Equipped with the necessary technology, we concentrate on the automotive and cosmetics industries. However, in the industrial sector, we cannot compete with Chinese companies on price. So, we are seeking opportunities in the low-price market that also emphasizes quality. There is a segment where, despite lower costs, clients still demand higher quality.

High-value markets are often dominated by companies from advanced economies such as Japan, Germany, and the U.S., which hold numerous patents and offer high-performance products. How do you position yourself against this competition, and what are CQV’s key advantages?

In fact, all players in our industry aim to enter the high-value market. To succeed there, the prerequisite is technology and expertise. Legacy companies, such as those in the U.S. and Japan, have developed their technology and skills over many years. However, our R&D speed is significantly faster than these traditional companies. As a result, we hold all the necessary patents for the high-value industry, and we also develop applications that address the needs of our clients. This is why CQV is well-known in the high-value sector. Although we are a small company, we have established a strong brand value, making us one of the giants in the field.

Our R&D speed is a key strength. Despite our rapid pace, we maintain the highest quality with highly sophisticated processes. CQV was established 25 years ago, and over that time, we've built powerful brand recognition and kept pace with other industry leaders. I believe this gives us a significant competitive edge.

In the past decade, we have focused on developing a unique product portfolio that only we can offer. It is distinct, unlike anything other companies produce. By creating a blend of our diverse products, we have continuously driven up our average selling price, contributing to our growth.

In 2023, GNMI (Global New Materials International Holding), the largest pearlescent pigment producer in China and the third-largest globally, acquired 42.45% of CQV’s shares. Recently, the group further strengthened its position by acquiring Merck’s Surface Solutions business, which also produces pigments for similar industries. How will this acquisition and collaboration impact CQV’s future growth?

I believe that CQV will play a critical role within the group. To explain this, I’d like to highlight the significance CQV holds for GNMI. When GNMI first expressed interest in acquiring CQV, they had been observing us for over 15 years. During this time, they evaluated our technology and the influence we have in the market. They were looking for the right moment to invest in our company and its development. In other words, we possess the technology and market influence that GNMI sought. The acquisition of Merck Surface Solutions is also a result of CQV’s significant role in the industry. Therefore, we are not concerned about Merck’s acquisition, as we see it as a complementary move.

Looking ahead, our focus will be on integrating the diverse cultures of Korea, China, Europe, the U.S., and Japan. While it can be challenging to bring together people from different countries, we have seen tremendous progress in this area. Initially, our revenue was 100% domestic, but now 70% of our revenue comes from exports. This shift demonstrates that our employees have developed a global mindset, which will be key to harmonizing the different cultures and perspectives across China, Europe, Japan, and the U.S. As a result, we believe that we can be a highly effective agent in fostering collaboration within the group. Even though we are the smallest company in the group, our influence will be substantial.

As CEO of CQV, CTO of GNMI, and a board member, I am committed to fulfilling my roles and responsibilities. In fact, the goals of CQV and GNMI are closely aligned, and I will make every effort to meet the expectations set for me and the company.

Sollite, solar panel application.

Could you introduce CQV?

CQV was established in 2000 and listed on KOSDAQ in 2011. We currently employ 189 people and operate three factories, all located in Jincheon province. Our product range includes pigments for cosmetics, industrial applications, and exterior use. Our flagship products are colored aluminum paste and aluminum paste. 

There are the key strengths of CQV. First, the global network. We have a strong global presence, with over 100 agencies around the world. Second, broad applications. Our products serve a wide variety of industries, including cosmetics, automotive, and general industry, making us highly adaptable to changing market conditions. Third, the R&D center. Approximately 11.6% of our workforce is dedicated to research and development. Last year, R&D expenses amounted to around 6% of our total revenue. Our R&D center consists of various departments, including research, promotion, and quality assurance. Since 2018, we’ve consistently developed new products, with eight new products launched in 2018, 40 in 2020, and 16 this year. One of our recent innovations is a pigment designed for LiDAR in automotive applications. We also developed Sollite, a pigment for solar panels.

Could you explain the role of Sollite pigment for solar panels?

Sollite combines two features: the aesthetic aspect and the functional capability of generating electricity with solar panels. We focus on maintaining the functional benefits while ensuring the product remains visually appealing.

In the past, the pigment industry was primarily focused on aesthetics, but you are increasingly developing functional pigments. Is this the future direction for the company? 

Yes, this is definitely the future direction for us. Traditional pigments have mostly focused on aesthetics, but we are shifting towards functional pigments for two main reasons: first, to expand our market reach, and second, to meet growing market demand. Existing pigments can negatively affect the efficiency of LiDAR systems due to resistance, which hinders the widespread adoption of full automation. As a result, there is a clear need for pigments that are both aesthetic and functional, particularly those that can support LiDAR/TSR functions.

We recognized this market need and took proactive steps to develop new technologies and elements to address it. We are always looking ahead, focusing on the next 10 to 20 years, and developing our technology to meet future requirements.

If we only offered aesthetic pigments, we would eventually hit a growth ceiling. To expand our market presence, we must focus on functional pigments that can serve a broader range of applications. For example, our LiDAR pigment not only enhances the functionality of LiDAR systems but also supports TSR (Total Solar Reflectance) to improve energy efficiency. In electric vehicles, for instance, the pigment helps reduce the energy used for air conditioning, which is a significant energy drain. This means our LiDAR pigment has three key functions: LiDAR support, TSR, and aesthetic enhancement.

When exporting automobiles to the United States, meeting TSR standards is crucial to avoid heavy tariffs. Our pigment meets these TSR standards, providing energy efficiency and benefiting exports.

In a world where cars will be fully automated, this seems like it could become a standard requirement for all cars with this technology. Considering TSR helps save energy and reduce carbon emissions in vehicles, it may also become a mandatory stringent requirement. Are we seeing the development of future standard technologies that could be adopted by all types of cars? 

As we enter the era of electric vehicles (EVs), TSR and LiDAR technologies will become increasingly crucial. Currently, only dark pigments have been developed for these purposes. However, we are also working on functional and aesthetic pigments that are not necessarily dark but still serve both functional and aesthetic roles. We are particularly focused on developing more functional pigments.

Not only in EVs, but also in buildings, there is significant energy consumption due to cooling and air conditioning. If TSR technology is adopted for buildings as well, it will improve energy efficiency across industries. I believe this development will occur within the next 10 years. In fact, the Korean government plans to mandate Building Integrated Photovoltaics (BIPV) within three years, requiring all buildings to have solar panels. This will further expand the market for TSR and functional pigments, and it’s excellent news for us. Additionally, BIPV is gaining global attention, which will create new opportunities for us.

To support this, we are expanding our R&D department with additional floors at our building. We will install BIPV on-site to demonstrate its functionality and use the building as a promotional tool. This will showcase how different colors can be used in interior designs while testing and promoting our products.

Do you collaborate with paint makers, or OEMs for your new development?

In the automotive industry, we partner primarily with paint manufacturers rather than directly with automotive companies. For example, while we don't have a direct contract with various global automotive companies, we do have contractual relationships with their suppliers.

For the cosmetics industry, we work directly with cosmetics manufacturers. We maintain direct relationships with top-tier global cosmetics groups.

Metallic exterior application.

In 2023, the company grew by 10%. It seems 2024 will also see an increase in revenue. What will be the key drivers of growth for the company in the short term?

The automobile and cosmetics industries will remain the core sectors that we focus on and expand further. In the industrial applications segment, we’ve faced challenges due to price competitiveness, especially compared to Chinese producers. However, we are overcoming this by strategically leveraging our distribution channels to supply GNMI products.

In terms of colored aluminum, it’s a metal pigment, not a pearl pigment. The metal pigment industry is highly saturated, and we came into the game later. However, we’ve strategically targeted high-quality, high-value markets, developing technologies that cater to these clients' needs. This is how we’ve managed to penetrate the market, even in such a competitive field. Despite the challenges, we have a strong competitive edge and are confident about our growth in the coming years.

We’ve combined our expertise in pearl pigments and metal pigments to create a hybrid technology, and this development is progressing much faster than we initially anticipated. We’re excited about the potential of this innovation, as there aren’t many companies producing both pearl and metal pigments.

CQV has a strong brand image internationally and a solid presence in the U.S., Europe, China, and Japan. Where do you foresee international opportunities in the future? Where do you anticipate the company’s short-term growth coming from?

Currently, we are part of GNMI, which has a strong presence in China. We believe China will serve as a key market for us in the long term. Additionally, we are focused on expanding our market share in the U.S. and Europe. By enhancing our penetration into distribution networks, we expect to unlock more opportunities in these regions.

CQV itself has achieved a 10% growth rate. Now, as part of a larger group, we have a much stronger growth engine. To truly accelerate our growth, we need to push forward and integrate more effectively. With GNMI's cost-effectiveness and high production capacity, combined with CQV’s technological expertise and talented human resources, we are positioned to become a pioneer in the pigment market.

Let's say we revisit in a few years. What would you like to reflect on as your personal achievement?

On a personal level, I’d be proud of the contributions I’ve made as CEO of CQV, and if I take on additional roles within the GNMI group, I would be honored to serve those roles for the benefit of the company. Of course, I would also prioritize maintaining my health—staying healthy would be key to achieving all these goals.

For more details, explore their website at https://cqv.co.kr/