The traditional specialist in automotive seats, Unichem, expands into the entertainment and fashion divisions, to become more active and seeks to enter the consumer market with their handbags.
There are many OEMs and ODMs in Korea that deliver excellent products, with production processes and quality that are also quite unique. Specifically, in the leather sector, Korea is not typically the first country that comes to mind. So, what sets apart Korean suppliers in textiles manufacturing compared to other producers?
Korean fashion suppliers possess global competitiveness not only in design sensibility but also in technical expertise and rapid responsiveness. We are particularly strong in quality control (QC), sustainability, and production flexibility. While Europe emphasizes craftsmanship, Korea’s strengths is in technological innovation and efficiency. The key differentiator is our ability to quickly and precisely respond to the needs of clients in a rapidly changing market.
Due to rising geopolitical tensions and tariff policies, many brands and automotive manufacturers are now restructuring their supply chains and moving away from Chinese suppliers. From your perspective, both in the automotive and fashion industries, do you think now is an ideal time to reshape and participate more actively in the global supply chain? What are the challenges and actions you are taking?
At Unichem, our main automotive clients are Hyundai and Kia, while in the fashion industry, we supply brands such as Coach and Burberry. As you mentioned, the geopolitical risks, particularly the tensions between China and the United States, have become more pronounced. This has prompted many companies from Japan and the United States, which had previously expanded into China, to approach us and other Korean firms as alternative sourcing partners for leather goods. For our existing global supply chain, we have primarily supplied Hyundai, Kia, Coach, and Burberry directly from Korea. However, as our clients expand internationally, they are increasingly favoring local production to mitigate geopolitical risks. Consequently, we are also developing plans to expand overseas and establish localized production.
Additionally, with the ongoing shifts away from China due to geopolitical tensions, we see an increasing opportunity to attract production back to Korea. From a geographic perspective, we see significant potential in Central Asia, particularly in countries like Nepal, Turkestan, and India. These countries serve as neutral zones in the current geopolitical landscape, maintaining friendly relations with the United States, Europe, Russia, and China. Many of our clients are considering entry into Central Asia. If major brands such as Hyundai, Kia, or European and American companies establish a presence there, we believe substantial opportunities will follow. While this may not happen immediately, the potential is evident. In the past, global trade among the U.S., Europe, and China was largely unrestricted, but now, countries like India and those in Central Asia are emerging as mediators in international trade.
You mentioned earlier that, due to this geopolitical situation, you were planning to go abroad. I assume this involves opening factories overseas. Could you elaborate on these plans, including the timeline and your expectations for this expansion?
The information we can share publicly at this point is that we are targeting two major regions for expansion: Eastern Europe and Mexico in North America. Mexico is particularly strategic because it hosts a large leather industrial complex that imports hides from Brazil and processes them into finished leather products. Regarding the timeline, We are currently reviewing plans to begin operations in both regions in the second half of 2026.
Often, overseas expansion presents multiple challenges, including limited capital investment and the difficulty of maintaining consistent production quality. What measures are you taking to overcome these challenges?
Both our President and Vice President have extensive experience working at major automotive companies such as Hyundai Motor and KG Mobility (formerly SsangYong Motor). Through these experiences, we have gained valuable insights on how to successfully enter and expand into global markets. Furthermore, as these automotive companies have expanded into regions such as the United States, Europe, Southeast Asia, Russia, and China over the past 20 years, they have developed a wealth of expertise, which they have shared with their suppliers. This highly integrated, group-based business culture is somewhat unique to Japan and Korea. Thanks to the knowledge accumulated through this collaborative process, we possess substantial indirect experience regarding capital investment, taxation, organizational structures, and tariffs, which equips us to effectively navigate overseas expansion.
However, maintaining consistent product quality remains a major concern, particularly with natural leather materials. Relocating production overseas without transferring our accumulated expertise makes it extremely challenging to maintain consistent quality. Therefore, we plan to relocate only specific portions of the production process abroad. Tasks such as painting, cutting, and sewing will be handled on a smaller scale overseas, while core processes will remain in Korea. This approach forms the basis of our global expansion strategy.
Until 2022, our Vice President worked at Hyundai Motor Group. When Hyundai expanded to Alabama or Georgia, such as the Savannah plant, they gathered their entire supply chain, educating partners from the early stages of investment planning and factory construction. This cooperative exchange of critical risk management information included Unichem as well.
You have recently signed a joint development and order agreement with Texbase, one of Korea’s largest leather material distributors. How will this partnership improve your leather sourcing for both automotive and fashion markets, and how will it reshape your product portfolio?
As I mentioned, leather can be broadly categorized into natural leather, synthetic leather, and bio-hybrid leather, each requiring distinct materials and production processes. Unichem primarily specializes in natural leather. However, numerous startups worldwide, in Korea, the U.S., Europe, and China, are developing innovative new materials. To accelerate internal development, we are collaborating with domestic startups to create next-generation materials.
For production flexibility, we are also seeking partnerships with synthetic leather companies. While our production processes differ from theirs, we are exploring collaborative strategies that leverage each other's strengths.
Currently, we source all our raw hides from the United States. However, we are diversifying by expanding our sourcing network to South America, where suppliers offer both raw hides and crust leather, semi-processed leather that has already undergone tanning and is ready for finishing. By importing crust leather, we further diversify our sourcing options.
In short, to maintain flexibility, we are collaborating with external startups and synthetic leather producers on product development, diversifying raw material sourcing across multiple regions, and exploring new material opportunities in China as well. This comprehensive collaboration across sourcing, production, and development forms the basis of our adaptive strategy.
The leather industry is primarily driven by fashion and the automotive sectors. How do you foresee demand for leather goods evolving over the next three to five years, and what key trends do you expect to influence the market?
Over the next three years, we anticipate that the leather market will evolve rapidly as traditional methods coexist with emerging technologies and changing consumer values. As global environmental awareness solidifies, demand for alternative materials such as recycled leather, bio-based leather, and vegan leather is expected to grow, moving beyond reliance solely on traditional animal leather. Materials like mushroom-based leather, for instance, are gaining increasing attention. Leading global fashion brands such as Hermès and LVMH are adopting new standards that emphasize carbon footprint reduction and traceability with animal welfare certifications.
From a supplier’s perspective, Unichem recognizes the importance of proactively responding to these industry shifts. We are investing in R&D to develop eco-friendly leather using sustainable manufacturing processes, as well as advancing bio-based leather materials. The instability of global logistics networks following the pandemic may also impact leather supply chains, making it essential for manufacturers to establish efficient logistics systems and implement flexible inventory management to mitigate price fluctuations. Consequently, forming long-term supplier-buyer partnerships to stabilize supply chains is becoming increasingly critical.
As I’ve outlined, the leather market today comprises three main categories: synthetic leather, natural leather, and newer materials such as eco-friendly, bio-based, and vegan leathers. These various materials are processed into finished products ranging from footwear, automotive interiors, and fashion items to pet products. Some leather by-products are even used to create food-grade items for pets like dogs and cats.
The overall market for finished leather goods is projected to grow at an annual rate of approximately 6% between 2023 and 2030, reaching an estimated market size of around 400 trillion KRW by 2030. Meanwhile, the volume of cattle slaughter continues to rise, increasing the availability of natural leather. As a result, both traditional natural leather and premium new materials are expected to continue growing at roughly 6% annually.
Given these dynamics, Unichem is adopting a flexible approach that allows us to adjust to evolving market demands rather than focusing on a single segment. This strategy will guide us from 2023 through 2030. Since we cannot control market trends or consumer preferences, our priority is to maintain the agility to respond to any market development.
Since its founding 1976, Unichem has evolved into a global leather supply partner trusted by major international fashion houses and accessory brands. Looking back, what have been the most pivotal moments in Unichem’s journey?
One of the most significant milestones in Unichem’s journey was the two-phase construction of new manufacturing facilities and the introduction of state-of-the-art equipment between 2017 and 2021.
Since its founding in 1976, Unichem has built a legacy of craftsmanship spanning nearly half a century. However, we have never settled for the status quo. In response to changing times and market demands, we proactively replaced outdated infrastructure and equipment, transforming our operations to meet modern standards. We invested in advanced machinery such as automated cutting systems and chemical quantification systems. which led to significant improvements in both product quality and production efficiency.
UNICHEM continues to invest in technological innovation and development to meet market shifts and client needs, all while upholding long-term partnerships based on trust and responsibility.
We are committed to leading the transformation of Korea’s leather industry.
What is your vision for Unichem’s international presence over the next 1-3 years?
Whether through our website, communications with customers, investors, or the media, we consistently share the same vision, direction, and strategy for Unichem. At the core of our vision is a strong commitment to eco-friendly materials. While we remain focused on natural leather, as mentioned, we are also collaborating with synthetic leather producers and bio-material startups to jointly develop a wide range of eco-friendly options. Our core vision is to build our business around sustainable materials that contribute to global market growth while addressing environmental concerns.
Additionally, Unichem has recently expanded into the entertainment sector, applying the same eco-friendly philosophy under what we call “green management.” Our vision is to create synergy by integrating carbon reduction efforts not only in materials manufacturing but also within our entertainment operations, contributing to global environmental protection.
Currently, we have only one production facility. Our strategy is to gradually increase our global presence while transitioning our domestic partnerships into an international collaboration network. To achieve this, we are actively pursuing M&A opportunities and seeking new investments.
Interestingly, we are questioning whether the long-standing dominance of luxury brands like Louis Vuitton and Chanel, whose products often carry extremely high price tags, will persist indefinitely. This has led us to consider creating our own brand that emphasizes high-quality, eco-friendly materials instead of following the conventional luxury model of excessive markups.
Internally, we are actively discussing whether younger generations, Millennials and Gen Z, will continue purchasing ultra-high-priced luxury goods or whether they will instead value brands offering sustainable, environmentally responsible products at more reasonable price points. For instance, we are exploring alternatives to the current model where products that cost 100 KRW to manufacture are sold for 10,000 KRW.
This concept is still in its early stages of development. We hope that by sharing our vision through this interview, we may attract the attention of potential investors who share our philosophy.
To explain our business model more clearly, Unichem currently operates two divisions. Our materials division, which handles fabrics and leather, is based at our Ansan plant, while our entertainment division, which focuses on design for dramas and handbags, is located in Seoul.
Though some may struggle to see how these divisions are interconnected, their synergy works as follows: the entertainment division designs handbags, which are then featured in dramas as product placements where celebrities wear or carry them. As these products gain exposure and popularity, consumer demand increases, which in turn drives sales for the materials produced by the materials division. This creates a complementary business model that generates synergy between the two.
Today, influencer-driven marketing through social media often generates stronger impact than traditional advertising. We are actively exploring this approach. For example, when a celebrity like a member of Blackpink wears a particular pair of shoes, the product often sells out the following day, regardless of whether it is from a luxury brand. This is why we are strengthening both our leather and entertainment divisions, with the goal of creating mutual synergy.
In the 2010s, many younger people in their 20s, 30s, and 40s, ordinary middle-class consumers, were eager to purchase luxury goods. That trend seems to have slowed. What do you think caused this shift?
I believe this change became apparent after the pandemic. The massive liquidity injected into global markets post-pandemic led younger generations to purchase more luxury goods while also increasing investments. Many even stretched their finances to acquire real estate, investing heavily.
However, with escalating global trade tensions, such as current U.S. tariff policies, there are rising concerns about Korea’s economic outlook for both domestic consumption and exports. While people initially hoped to build wealth through investments, growing economic uncertainty is now causing younger generations to tighten spending. This is something we are concerned about as well, as luxury brand revenues are also declining. That is today’s reality.
Which eco-friendly leather do you believe offers the most value for the fashion segment?
While we continue to operate our existing natural leather business, we are realigning our strategy to address the growing sustainability focus of global fashion brands. Leading brands are making significant commitments to environmental protection. For instance, Louis Vuitton has announced plans to eliminate single-use plastic-based materials and transition to fully recyclable products by 2025.
In line with these global shifts, we will continue using natural leather produced via environmentally conscious tanning methods. Simultaneously, we plan to focus more on regenerated materials for eco-friendly and vegan leather, such as bamboo- and mushroom-based alternatives.
How do the properties and quality of mushroom and bamboo types vary compared to other types?
At this stage, bamboo-based leather provides superior physical properties and durability. However, mushroom-based leather offers greater differentiation as an innovative bio-based alternative. We are currently working to address mushroom leather’s limitations and develop a fully functional model for application in fashion products.
This year, we visited a European company producing alternative leathers from apple and grape peels. After reviewing their facilities, gathering samples, and comparing them with our own mushroom- and bamboo-based leathers, we found their quality and performance somewhat lacking.
We also learned that Volkswagen in Germany plans to introduce hemp-based car seats by the end of 2026, which is another area we are closely monitoring for potential development.
What final message would you like to share?
Unichem originally started as a manufacturing company. However, if global audiences and potential partners read this report, I hope they will recognize that Unichem is now embracing new challenges, expanding beyond materials into brand development and entertainment. Since collaboration is one of our core strategies, we want to communicate that we are open and ready to engage with a wide variety of partners.
Finally, one of our divisions specializes in leather production, but raw leather cuttings are not sold directly to consumers. Instead, consumers purchase the finished goods created from these materials. Currently, Unichem is mainly recognized within the automotive sector, but our brand remains relatively unknown in other markets.
As our entertainment division becomes more active and our handbags enter the consumer market, we believe Unichem will have an opportunity to build broader brand awareness beyond the automotive field. This is an exciting prospect for us, and in fact, it is one of the main reasons we chose to participate in this interview today.
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