SK Innovation, the energy business holding unit of SK Group, is looking to bolster its petrochemicals business in its main export market China by pursuing more strategic partnerships along with mergers and acquisitions.

SK Innovation vice chairman and CEO Chung Chul-khil on Thursday visited SK Global Chemical’s main office in Shanghai and ordered the firm to step up its efforts to drive up its performance in the country.

“Despite rising concerns about the global economic downturn and slowdown of the Chinese economy, China nonetheless offers many opportunities for growth as the world’s biggest petrochemicals market,” Chung told the firm’s management in Shanghai during its first strategy meeting of the year.

“We must strike more strategic partnerships with Chinese petrochemical companies to create more success stories” he said, noting the progress of Wuhan Ethylene Corp. -- a 35:65 joint venture between SK Global Chemical and leading state-owned Chinese oil and gas producer Sinopec, established in 2013.

The JV invested 3.3 trillion won ($2.7 billion) into building and operating a naphtha cracking plant in Wuhan, Hubei province, in 2014. The facility turns naphtha -- derived from refining crude oil -- into diverse petrochemical products like ethylene, polyethylene and polypropylene.

The plant, the largest ever petrochemicals JV formed between China and Korea, has been highly profitable since operations began in 2014. It posted an operating profit of 465 billion won last year, more than triple the amount recorded the previous year.

The SK Innovation executive also urged SK’s petrochemicals unit to shift its main focus away from commodity chemicals to high value-added chemicals,” ordering the company to “actively pursue M&As with smaller, competitive global firms in the segment.”

SK Global Chemical pledged Thursday to search and pursue partnerships with promising companies in China and elsewhere which possess exclusive technologies in the value-added chemicals production sector.

Chung is scheduled to visit the JV plant in Wuhan on Friday. He also recently visited two plants in China operated by SK’s other two JVs established with Sinopec and Ningbo EPDM.

By Sohn Ji-young (jys@heraldcorp.com)