2. Parts & Materials Korea, Where Success Knows No Limits Index 1. Overview3 2. Competitiveness & Prospects10 3. Government Policies14 4. Costs16 5. Success Cases17

3. Industry Overview Definition of parts & materials 3 “Raw or intermediary products used to manufacture commodities that can do much or create ripple effects to spread technologies or high value-added, in conjunction with advanced or critical technologies, or any and all goods forming the foundation of an industry or with effects interconnecting different industries.” Legal Definition

4. Industry Overview Status of Korea's parts & materials industry in 2012 4 Source: KOSIS, ISTANS Trend Indicators of Key Industries, KAIT 248,373 248,373companies Production 668 KRW trillion Added value 316 KRW trillion 1,420,000People

5. Industry Overview Trade performance 5 Source: KIAT, Integrated Services Digital Network for Parts & Materials Performance and rise/fall of trade balance of the top 12 parts & materials business categories Performance and rise/fall of trade balance of the top 12 parts & materials business categories (Unit: USD 100 mn.)

6. ExportsExports Industry Overview Top 5 exports & imports 6 Source: KIAT, Integrated Services Digital Network for Parts & Materials ImportsImports TypeAmount% 1. LCD 24,8629.4 2. Other automobile parts 22,1898.4 3. Memory semiconductors 17,3405.8 4. Other semiconductors 15,3205.8 5. Synthetic resins 13,7665.2 Sum 93,47835.5 Total parts & material exports 263.120100 TypeAmount% 1. Other IC semiconductors 20,18012.2 2. Cold rolling & extruded products 7,2324.4 3. Other non-classified chemical products 4,9353 4. Switchboards & auto electric control panels 4,6872.8 5. Memory semiconductors 4,3132.6 Sum 41,34725 Total parts & material Imports 165388100 (Unit : USD 1 mn)

7. Industry Overview 7 Source: KIAT, Integrated Services Digital Network for Parts & Materials (Unit: USD 1 mn) Parts & materials export trends and proportions for each area Exports by region

8. Industry Overview Korea’s share of global exports 8 Source: KIAT, Integrated Services Digital Network for Parts & Materials Korea’s share and ranking in parts & materials exports in the global market exports in the global market Korea’s share and ranking in parts & materials exports in the global market exports in the global market (Unit: USD 1 bn) 2001 2007 2010 $ $ $ $ $ $ 77 187 256 10 th 8 th 5 th

9. Industry Overview Status of foreign direct investment 9 Source : Ministry of Trade, Industry & Energy Trend of cumulative foreign investment in manufacturing / parts & materials industry Trend of cumulative foreign investment in manufacturing / parts & materials industry ( Unit: USD 1 bn) 73%↑

10. Competitiveness and Prospects Status of items per sector/type 10 Source: Ministry of Trade, Industry & Energy Proportion of each item of parts & materials in 2012 based on production Proportion of each item of parts & materials in 2012 based on production (Unit: %)

11. Competitiveness and Prospects Status of items per sector/type 11 No. of business entities Production No. of employees (KRW 1 mn, %) (Companies, %) (People, %) 72% 480,439,458 28% 187,851,457 Metropolitan Non-metropolitan Source: Ministry of Trade, Industry & Energy 38% 534,616 62% 884,506 47% 11,711 53% 13,126

12. Competitiveness and Prospects High trade specification index 12 Variation of trade specification index of all industries and parts & materials sector Source: Ministry of Trade, Industry & Energy Unit: % (in sales)

13. Competitiveness and Prospects Increase in competitiveness 13 Competitiveness by category

14. Government Policies Investment Corporation Center (OASIS Center) 14 Support for investment cooperation between on/off-shore parts/materials enterprises 1 Investment information hotlines for on/off-shore parts/materials enterprises (OASIS) 2 Investment promotion IR for parts & materials 3 Liaison between central and local governments 4

15. Government Policies Support for Parts & Materials Complex 15 Factory and research facility site purchasing cost Cost of installing infrastructures infrastructures 4 Factory and research facility construction cost Cost of buying capital goods and research appliances Cost of buying capital goods and research appliances Facilities grant 12 3 6 5 4 Employment subsidy

16. Costs Profitability per cost 16 (Unit: KRW 1 mn.) 23%↑ 26%↑ (Unit: KRW 1 mn.) Per-employee production of added value Per-employee production Parts & materials All industry

17. Success Cases Overview of the Parts & Materials Complex 17 Bio Pohang: IGK - IGK has built a factory in a 100,475 ㎡ area in the 5th block of the Pohang Parts & Materials Complex. Gumi: Delkor – In 2010, Delko signed an MOU with Gumi City for investment in a parts and materials complex plan. Iksan: Yasunaga Korea - 4 th -largest container port in Korea - Largest car exporting port in Korea Changwon: Tsubakimoto - Plans to invest an additional KRW 19 billion in production lines

18. 1996 2008 2011 Success Cases Toray R&D Center project 18

19. 1985 2010 Success Cases Delkor Study 19

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