SK chief urges EU-style cooperation as two neighbors hit parallel limits in growth, demographics
SK Group Chair Chey Tae-won speaks at the Tokyo Forum 2025 at the University of Tokyo on Nov. 21. (SK Group)
One of the key messages Chey Tae-won, chair of the Korea Chamber of Commerce and Industry and SK Group, has been emphasizing most fervently in recent months is the need for stronger cooperation between South Korea and Japan.
As leader of the nation’s largest business lobby, Chey’s argument is blunt: Both East Asian neighbors are hitting the limits of their existing growth models, grappling with stagnant domestic economies, aging populations and rising global trade barriers. They can no longer afford to face the future alone and need to cooperate for bigger market and new opportunities.
Chey has conveyed this message since 2023 and repeatedly made case throughout this year in press conferences, media interviews, and meetings with Japanese and Korean officials.
His advocacy for a Korea-Japan economic alliance — a sensitive topic given the long-running historic feud between the two neighbors — stands out in a country where major chaebol chiefs typically stay away from bold public remarks.
Chey says the unusual candor is derived from his responsibility as a KCCI chair and from his late father’s lesson that business leaders must contribute to the national economy.
“If I don’t convey what I am thinking, I can’t contribute to the country,” he said in a joint interview with YouTube channels 3Pro TV, Understanding and Apkown, aired on Oct. 26. “After 40 years in business, I’ve seen where Korea stands and what must be done. Ideas like the Korea-Japan economic alliance are meant to drive policy and change,” he said. If there is no change in Korea, all (our descendants) will say that we lived well and left them nothing.”
Stagnation, demographic challenges
Chey’s call for a Korea-Japan economic partnership stems from concern that Korea’s economy has fallen into a low-growth trap and is running out of room to expand. The export-led model that powered Korea ‘s rise, he argues, has hit practical limits.
“South Korea’s concern is that its growth rate is slow and it has lost its growth momentum,” Chey said on April 22 at the National Assembly’s Future Industry Forum.
“It is difficult to return to the days of free trade under the WTO system,” Chey said on YouTube. “The export-driven economic growth formula that worked since the 1960s no longer functions due to tariffs”
In his view, Korea no longer has the scale to overcome stagnation alone. Combined with sluggish growth, the country faces demographic pressures from an aging population and declining birth rates. Making the situation worse, the protectionist policies and tariffs under the Trump administration have hit the country hard.
As a solution, he look to Japan, which faces a similar problem of low-growth, trade headwinds and demographic challenges.
Korea’s population aged 65 and older has reached 20.6 percent, passing the 20 percent threshold the UN uses to define a super-aged society. In Japan, the figure stands at 30 percent, one of the highest in the world. Korea’s total fertility rate is the world’s lowest at 0.75, compared with Japan’s 1.15. Both economies remain heavy dependent on exports and manufacturing, making them vulnerable to labor shortages and protectionist measures.
“Chey has consistently said that Korea has reached the limits of its growth. As he looked for ways to break out of this stagnation, he arrived at the idea of a Korea-Japan economic cooperation,” said an official at the KCCI. “With our own market alone, it is no longer possible. To revitalize the economy, we need a much larger economic scale, and that’s why a Korea-Japan cooperation is on the table.”
Chey’s vision is forming an economic bloc between Seoul and Tokyo, akin to the European Union, to combat shared challenges and external uncertainties.
“When I use the word ‘alliance,’ I am talking about pursuing a situation where our economies actually come together,” said Chey on the YouTube. “With Japan’s GDP at around $4 trillion and South Korea at $2 trillion, we could form a market of around $6 trillion.”
He argues that a combined Korea-Japan market would create economies of scale, expand business opportunities and give the two countries bigger and a unified voice on global trade and security.
“When you think of the EU, it’s very simple. The EU has 27 member states, so reaching consensus can take years. But with just the two of us, it wouldn’t take that long,” he said. “The idea is to create a much more efficient version of the EU model. If Korea and Japan were integrated, it would still be smaller than China or the US, but still would become roughly the world’s fourth-largest economic bloc.”
Semiconductor, energy first
While Chey frames the Korea-Japan alliance as a broad economic vision — EU cooperation includes a joint legal system and customs area, effectively limiting the freedom of member states to make trade deals and other policies — he identifies two sectors where cooperation would be more straightforward: semiconductors and energy.
Korea dominates memory chips, with Samsung Electronics and SK hynix commanding global supply. Particularly in high-bandwidth memory chips essential for AI applications, SK hynix alone controls roughly 70 percent of the worldwide market share.
Japan, meanwhile, leads in semiconductor equipment and materials, with Tokyo Electron dominating photoresist coater and developer systems, while other Japanese companies control the global supply of silicon wafers and photoresists, all essential to chipmaking.
“With the spread of AI, demand for data centers is surging explosively and semiconductor demand is rising along with it,” Chey said in an interview with Yomiuri Shimbun in September. “If Korea and Japan, both strong in this field, join forces, it could become a new engine of growth.”
In a May interview with Nikkei, Chey also expressed interest in expanding cooperation in chip materials and equipment with Japanese companies and shared hope of integrating semiconductor ecosystem of both countries.
In regards to SK hynix’s indirect investment in Japanese memory firm Kioxia, Chey said he wants to approach it “not as a simple financial investor, but a strategic partner.”
Energy is also a sector where the two countries could cooperate for lower costs and strengthen security, considering both countries are resource-poor and heavily dependent on imports, Chey says.
“Both countries are isolated and must buy energy from outside. The idea is to purchase and store energy together and share it,” he said on YouTube, even floating the idea of sharing gas, electricity and nuclear energy.
He also proposed the two countries to team up on purchasing US liquefied natural gas, addressing Washington’s demand to buy more American products.
“By jointly purchasing energy, Japan and South Korea can increase deal size and leverage greater buying power to secure (the resource) at lower prices,” said Chey, in an interview with Nikkei Asia in May, noting that the collaboration could also improve both countries’ national security.
Beyond LNG, he sees potential in joint development of hydrogen technologies and shared use of energy storage infrastructure.
By Ahn Sung-mi (sahn@heraldcorp.com)
AloJapan.com