Innovative technology and creative businesses are set to become the next growth engine for Korea as the nation transitions from a manufacturing powerhouse to a technology-driven creative economy.
“The Korean economy is witnessing a slowdown and we are facing a dilemma of maintaining the competitiveness of Korean companies while sustaining economic growth,” said Kim You-sik, director of the creative economy promotion division of the Ministry of Science, Innovation and Future Planning. “Innovative technology will be the solution.”
Korean government officials and industry leaders were speaking at Foreign Investment Week 2015, an event organised by the Korea Trade-Investment Promotion Agency in Seoul in mid-October.
Korean president Park Geun-hye backs the initiative. Her administration has set up a programme – Manufacturing Innovation 3.0 – aimed at upgrading industry through manufacturing innovation.
Innovation 3.0 is largely built around the Internet of Things (IoT), technology that connects online data with physical objects such as products. Korea wants to develop the technology and adapt it to make devices ranging from automated cars and smart clothes to flexible batteries.
5G program
Innovation 3.0 will also focus on the development of 5th generation mobile technology – the 5G network.
Korea's 5G roadmap calls for commercialisation of the network by 2020.
The Northeast Asian country is a world leader in terms of 4G network penetration and is poised to sustain its leadership with the ultrafast 5G wireless network, a platform with the potential to unlock enormous new business opportunities for enterprises on the peninsula.
The 5G network will support data transmission speeds of up to one gigabyte per second -- about 1,000- times faster than the 4G platform. In practical terms, 5G users will be able to download a full-length movie within a second.
“The development of 5G in Korea is still in a preliminary stage as we are yet to confirm details such as frequency, data transmission and network security. But the infrastructure has been mostly in place and we are expecting to launch a full-service trial at the 2018 Winter Olympics to be held at Pyeongchang, Korea,” Jason Chung, Nokia’s head of research and development in Korea, told FinanceAsia.
Miracle on the Han II
Innovation 3.0 identifies 13 growth-engine projects aimed at creating a manufacturing ecosystem based on IoT and other digital innovations – a highly ambitious objective for a nation built on heavy industry that only entered the tech big leagues a little more than a decade ago.
But the Miracle on the Han, as the country's rapid economic rise is known, stands as proof of what Koreans, who now produce some of the hottest selling smartphones in the world, are capable of.
Advanced manufacturing processes within the new ecosystem will produce a range of innovative products, such as new materials, autonomous vehicles and robotics with health and safety functionality, among many others.
But most ecosystem projects will be focused on reinventing Korea's manufacturing sector – its core strength for more than half a century.
The automobile, machinery, textile and electronic appliance segments are facing increasing global competition and therefore need to be upgraded to stay competitive, said Lee Chang-hoon, senior deputy director of the industrial policy division of Korea’s Ministry of Trade, Industry and Energy (MOTIE).
The Korean government and private investment will the fund the new projects.
Research and development is already underway. The government hopes that the innovation 3.0-inspired ecosystem will flow patented processes and products that can be commercialised in the near future.
Seoul will encourage voluntary business restructuring for heavy industries such as shipbuilding, petrochemical and steel-making. They have been the three pillars of the Korean economy in the 90’s but many of them have been suffering from oversupply in the global market.
Infrastructure and education
Seoul has established 17 centres for creative economy and innovation (CCEI) across the peninsula. Each centre is backed by a large conglomerate and will assist small- and medium-sized enterprises in developing their innovative ideas and bringing them to market.
Samsung has joined hands with the government to establish an creative incubator in Daegu city, while an innovation center in Daejeon has cooperated with SK Group in the development of smart farms. Hyundai Motor meanwhile is partnering with the CCEI in Gwangju to study hydrogen-fuelled vehicles.
Lim Mu-song, director general of a labour policy bureau at the Ministry of Employment and Labour, said the nation is reforming its education system to inspire creativity, placing greater emphasis on problem-solving through experimentation.
By focusing on science, technology, engineering, art and mathematics, the nation hopes to develop a workforce equipped to thrive in the technology-driven manufacturing businesses of the future.
