Koman leads the Korean hydraulic hoses and fittings

For many exporters, this seems like an opportune moment for Korean companies to capitalize on global supply chain realignments and onshoring strategies, which encourage major corporations to rethink their networks in favor of partnerships with friendly countries. Do you agree with this perspective? What challenges and opportunities do Korean suppliers face within global supply chains?

I wouldn’t necessarily say that this is the ideal time for Korean companies to begin exporting. In my view, the best time for export expansion was right after the Asian Financial Crisis in 1997. Before the crisis, my company, Koman, operated as an OEM supplier for a major Korean heavy industry company, primarily focused on the domestic market. However, the crisis completely disrupted the domestic economy, forcing SMEs, including Koman, to turn to overseas markets. That was a pivotal moment, and it’s when I renamed the company “Koman,” short for “Korea Man,” to emphasize our commitment to representing Korea abroad.

During that time, Korean conglomerates also began their global expansions, Samsung launched its mobile phones in 1999, and Hyundai Motors aggressively entered international markets. Their successes paved the way for SMEs to establish a foothold overseas. I believe we’re now witnessing the long-term fruits of those efforts. Instead of framing this as the right moment for SMEs to start exporting, I’d say it’s a time to build on the reputation and trust that Korean companies have cultivated over decades.

Looking at the component market today, price competitiveness seems to dominate the sector. While some products can be customized, the focus is mostly on reducing costs, achieving flexibility in production, and meeting minimum quality standards. That said, Korean companies have proven to be trendsetters in automation, enabling them to stay nimble, compete closely on price with China and Vietnam, and adapt to today’s supply chain demands. With your new factories and advanced production processes, do you agree that automation is the way forward for Korean SMEs to remain competitive globally?

First, it’s important to note that Korea’s initial price competitiveness wasn’t due to cheap labor but rather a well-developed industrial infrastructure. Over the years, Korea has built strong machine-driven industries in sectors like steel, chemicals, and petrochemicals. This enabled us to efficiently repair and maintain equipment, minimizing downtime and reducing costs. That foundation—not automation—was the key to achieving price competitiveness in the beginning.

That said, I fully agree that automation is crucial for the future. Automation ensures stable production and enhances quality control in ways that manual labor cannot. While it may not directly reduce costs, automation improves quality, which can lead to cost savings over time. For instance, when we introduced a CNC automation line in 2007, tasks previously handled manually became more precise, resulting in fewer defects and less need for repairs. This not only improved the quality of our products but also enhanced our overall price competitiveness.

For Korean SMEs, integrating automation into production processes is essential—not just to reduce costs but to consistently deliver high-quality products that can compete globally. By focusing on both innovation and quality, Korean companies can carve out a sustainable position in the global market.

In today’s supply chain landscape, what do you think is critical for Korean companies in your sector to compete against labor-intensive countries like China?

Our flagship products are hydraulic hoses and fittings. The fittings are manufactured from carbon steel, and the hoses are fabricated from rubber compounds. Korea is a global leader in producing high-quality raw materials. The nation's world-class steel industry enables us to procure premium carbon steel, and multiple refineries supply raw material for making superior rubber compounds. The fact that numerous foreign companies advertise the use of Korean raw materials is a testament to the exceptional quality of our products.

In addition to these advantages, Korea offers an environment that supports rapid adaptation to changing customer needs. There are also good conditions in Korea to receive good quality raw materials, Korean companies thrive on a culture that embraces change, combined with robust infrastructure, enabling swift product development and innovation. This agility and flexibility give Korean manufacturers a significant edge—something labor-intensive countries find difficult to replicate in the short term.

Fittings and hoses are widely used across industries such as mining, construction, agriculture, oil and gas, aviation, and marine machinery. Demand is expected to grow in sectors like mining machinery due to the rising need for raw materials in the high-tech industry, construction driven by urbanization in developing economies, and even niche sectors like hydrogen production. From your perspective, which applications will drive growth for your company in the future?

Our primary focus has been on hydraulic equipment used in industries such as agriculture, mining, and construction. These sectors have steadily grown as they transitioned from manual labor to automation. As they become mature industries, our growth is now somewhat limited.

Looking to the future, we see significant opportunities in green energy and IT-driven industries. One example is our hydrogen recharging hose, developed as part of a national project over the past four years. This high-pressure hose, successfully completed this year, is set to become a key driver of growth in the new energy era.

In addition, as AI technology rapidly advances, the demand for innovative solutions in the IT sector is increasing. Koman’s Hydrochill hose has already been supplied to a global company’s data centers, positioning us as a contributor to the evolving AI era. We believe that hydrogen energy and AI-driven industries will serve as the foundation for Koman's future growth.

Semiconductor related products require very different standards, such as ultra-high-purity fittings, hoses, and valves. Similarly, hydrogen and data center applications have their own unique standards. How do you prepare your portfolio for entry into these new markets, and what challenges do you face when expanding it?

Until now, we have primarily focused on the hydraulic sector for our growth. However, over the past 5–6 years, we’ve been steadily expanding our portfolio to include industrial hoses. By strengthening our production capacity and advancing our technology in this area, we believe we can capture a larger share of the industrial hose market.

When it comes to meeting global standards, we rely heavily on our in-house R&D center. The center is dedicated to developing new products and ensuring they meet the specific requirements of different sectors. Fortunately, Korea has a robust infrastructure to support this. With access to leading raw material suppliers, machine manufacturers, and other resources, we can adapt quickly. For example, when adjustments to our equipment or processes are necessary, we implement them in real time.

A recent success story involves our participation in a national project with a Defense contractor in Korea.  The armored vehicle initially relied on globally recognized brands for its components. However, during the COVID-19 pandemic, the Defense contractor urgently needed a reliable supplier, and Koman was able to respond swiftly by delivering high-quality products that met their stringent purity and performance standards. This experience demonstrated not only our ability to adapt more flexibly than competitors but also our capacity to produce exceptional quality. We believe this capability will serve as a key strength as we expand into new markets.

Established in 1981, Koman has built a strong reputation producing hydraulic hose fittings and adapters. Starting as a close partner to the construction machinery businesses of Korean conglomerates, the company has expanded its expertise through innovations such as new forging processes, automation, and its own hose factories, eventually becoming a significant exporter. After this long and successful journey, what are Koman’s vision and ambitions for the future?

While we have focused on the hydraulic and heavy equipment industries thus far, we recognize the need to identify new growth drivers to secure our future. That doesn’t mean venturing into completely unfamiliar territory. Instead, we aim to leverage the expertise and experience we’ve built over the years to expand into untapped regions like Europe and the Middle East, where significant opportunities remain.

Simultaneously, we are closely observing the global transition to renewable energy. This shift aligns with our strategic focus on the hydrogen economy, which is why we are actively developing hydrogen recharging hoses. We see renewable energy as a promising area where our existing strengths can support innovation and growth, ensuring Koman remains at the forefront of evolving industries.

Additionally, we are committed to developing cutting-edge technologies to support the rapidly evolving AI era and the infrastructure it requires. As AI continues to reshape industries, we are focusing on innovative solutions, such as our Hydrochill hoses, which are already being supplied to global data centers. These efforts position Koman as a key contributor to the new infrastructure needed for this transformative age.

Hydraulic Hose

You mentioned two distinct business areas. What challenges do you face in reaching these markets, and how do you plan to penetrate them?

The biggest challenge we face is our relatively low brand recognition. Like many small and medium-sized enterprises, we operate in a market dominated by globally renowned competitors. These are companies whose names alone instill confidence in their quality—much like how consumers associate brands like Samsung or Apple with high performance. As a result, end users often prefer well-known brands over those they are less familiar with, even if the quality of the products is comparable.

To overcome this challenge, we have implemented a variety of strategies over the years. First and foremost, we ensure that our product quality matches or exceeds that of our global competitors. Additionally, we have focused on building trust by partnering with prominent international companies. By consistently delivering high-quality products to these global firms, we aim to showcase our capabilities and build our reputation.

We’ve also actively participated in exhibitions across multiple countries to promote the Koman name and increase our visibility. These efforts reflect our belief that, over time, our brand reputation will grow. As more customers recognize the quality and reliability of our products, we are confident that we will eventually stand shoulder-to-shoulder with our global competitors.

Electrification of equipment is increasingly prevalent in these markets. Do you see electrification as a challenge today, or do you believe it won’t pose significant issues in the future?

Electrification is undoubtedly a growing trend across industries, but we see it as an opportunity rather than a challenge. In fact, many electric-powered systems already utilize our hoses. For instance, our hoses are used in fast-charging stations to manage the heat generated during rapid charging, demonstrating their critical role in the electrification ecosystem.

Additionally, electrification is accelerating the shift toward renewable energy sources like hydrogen, which aligns perfectly with our strategic focus. Our hydrogen recharging hoses are a prime example of how we’re adapting to these changes and contributing to the infrastructure of a more sustainable future.

That said, we don’t believe electrification will entirely replace hydraulic equipment. In industries like mining, construction, and agriculture, where operations often take place in remote areas without reliable electricity access, electric machinery faces significant limitations. While small electric excavators are being developed, their use remains restricted to environments with consistent power supply.

In our view, electrification complements rather than replaces traditional technologies. By continuing to invest in R&D and aligning with this trend, we aim to stay ahead of the curve and adapt effectively to this evolving landscape.

Could you elaborate on how these collaborations will unfold? Will they focus on developing specific products, or are there other types of partnerships you envision?

We anticipate that the market will continue to demand products related to emerging energy solutions, such as hydrogen, as well as those essential for building infrastructure in the rapidly evolving AI era. To meet these needs, we are committed to developing the necessary technologies and products.

If collaboration is required to achieve these goals, we are open to any form of partnership. Whether it’s co-developing new technologies, sharing expertise, or joint ventures, we believe that adapting to the fast-paced changes of today’s world necessitates working closely with diverse global partners. Such collaborations will be critical to driving innovation and staying ahead in the market.

This year, Koman supplied radiator hoses for the cooling systems of an AI cloud platform. This collaboration stands out as it involves an overseas client in a rapidly growing, specialized industry. What led Koman to be selected as supplier for this project?

The Hydrochill hose we supplied for data center was a completely new product that we had never manufactured before. However, when the client presented their urgent and specific requirements, our R&D team responded swiftly and effectively. We successfully developed and delivered the product to meet high standards, a testament to Koman’s agility and adaptability. This ability to respond quickly to client challenges is one of our core strengths.

Similarly, we’ve achieved success in the shale gas industry. A common issue at the time involved frequent breakage of welded fittings during use, leading to quality concerns. One of our customers requested a solution, and we developed a one-body rotary fitting that required no welding. This innovation not only resolved the issue but also earned significant recognition from clients in the industry.

What I’d like to emphasize is that we are deeply committed to meeting our clients’ needs. Whether it’s developing entirely new products or improving existing ones, our client-focused approach drives our R&D efforts and underpins our success.

Your flexibility in tailoring solutions for your customers is impressive. Have you implemented new processes or solutions in your factories to support this adaptability?

Yes, we’ve made significant advancements, particularly during the COVID era. For example, we introduced automation into our assembly lines. Previously, these lines required eight operators, but with automation, we now only need one person to oversee the process. Similarly, for our bending systems—where manual labor was traditionally used—we’ve implemented a fully automated system, eliminating the need for human labor entirely.

Our focus on automation has greatly improved efficiency and consistency across our operations. Currently, we are concentrating on hoses, as our customers often request various types of industrial hoses. This demand drives us to develop and manufacture new types of hoses almost every month. This constant innovation keeps us competitive and responsive to market needs.

You recently established a second factory dedicated to hose production, which is relatively unique in Korea. Could you elaborate on the expectations behind this new facility and the industries or applications you aim to target with this increased capacity?

This year, we inaugurated our second hose manufacturing factory, which boasts three times the capacity of our first facility. The expansion allows us to meet growing demand and diversify our offerings. Additionally, we’ve acquired another plot of land adjacent to this facility, where we plan to build a third plant dedicated to industrial hose production in the near future.

Our primary goal with these expansions is to solidify our position in the industrial hose market while targeting high-growth industries. By increasing our production capacity, we can cater to a broader range of applications and industries, including construction, agriculture, and emerging sectors like renewable energy and advanced data centers.

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You mentioned plans for new factory. What was the reasoning behind this decision? What opportunities did you foresee that required this additional capacity?

A few years ago, we encountered significant challenges in meeting a sudden surge in customer demand. This led to a five-fold increase in our usual delivery lead times, a problem shared by many in our industry. While others hesitated to invest due to concerns about future demand, we recognized the urgency of the situation. Failing to meet customer expectations resulted in the loss of valuable clients, highlighting the critical need for improvement.

To address this issue and prepare for anticipated growth in demand for our newly developed hydrogen charging hoses, we decided to expand our production capacity. By acquiring adjacent land and planning for new factories, we aim to enhance our production flexibility, respond swiftly to customer needs, and position ourselves for future growth. We believe that meeting customer satisfaction requires not only delivering high-quality products but also providing timely and reliable service through continuous improvement and investment.

Was this investment made in partnership with your customers? Did they indicate they would place more orders if you expanded your capacity?

While we haven't received direct investment from our customers for this specific project, their feedback has been invaluable in shaping our investment decisions. They've expressed strong satisfaction with our products and services and have indicated a growing demand. This expansion is a direct response to their needs and expectations. the primary motivation for this investment was to proactively address increasing market demand and solidify our position as a leading provider in our industry.

Although customers may not explicitly promise more orders, establishing a new production facility demonstrates our commitment to meeting their needs and improving our capabilities. This proactive approach signals to our customers that we are not only willing but also equipped to deliver superior products. I believe this commitment enhances customer satisfaction and can naturally lead to increased orders over time.

Over the past four years, Koman has maintained steady growth, reaching 67.57 billion KRW in revenue in 2024. Despite challenges such as rising raw material and energy costs, Koman has consistently achieved around a 10% operating profit margin. Over the next three to five years, how do you envision Koman’s growth? Will you focus on deepening relationships with existing clients, or are you looking to expand partnerships with new ones?

Fortifying our relationships with existing clients is a cornerstone of our strategy. By elevating our brand visibility through strategic collaborations, we aim to solidify our market position.

We anticipate significant growth in our core business sector, leveraging our established client base. Additionally, we foresee promising opportunities in emerging markets, particularly in the renewable energy sector. Our innovative hydrogen recharging hoses and hydrochill hose position us at the forefront of technological advancement, enabling us to capture new market segments and expand our client network.

Our report focuses on the manufacturing sector in Korea. For our readers, in one or two sentences, what would you like them to take away from this report?

Our company’s slogan is “Moving the World, Connecting the Future.” Our products serve as the lifeblood of machinery, akin to blood vessels in a human body. Just as blood enables movement and vitality, our hydraulic solutions power the movement of equipment across industries.

At Koman, we take pride in driving innovation and ensuring that the world moves forward seamlessly, connecting industries and people to a more sustainable and advanced future.

Find also their article on Newsweek: https://www.newsweek.com/insights/industrial-hoses-blood-vessels-industry