The IT industry, whose export performance played an important force in domestic economic growth last year, seems likely to continue in the same vein this year with some ups and downs in certain items.
As international institutions such as the IMF have forecast, the rate of growth in world commerce is likely to decrease from 8.8% last year to 7.2% this year and the rate of increase of imports by the U.S. and Japan is forecast to slow down. Accordingly, Korean exports in total seem likely to shrink a little compared with last year.
However, considering that the competitiveness of domestically made IT products is on the rise thanks to improvements in quality as well as growing awareness of their brands, IT exports in 2005 are expected to reach $85 billion, up 15% compared with last year.
Mr. Sang-Keun Ahn, head of the IT & Cultural Industry Export Center, within the Korea Trade & Investment Promotion Agency (Kotra) said in an interview with the Korea IT Times that the cellular phone is anticipated to be the highest value export product in the IT field this year. He attributed this to proposed expansion of 3G mobile phone services in the U.S. and China and heightened demand from the emerging BRICs market.
Display products such as LCDs will also grow in importance among IT exports this year thanks to the acceleration of digital convergence as well as demand generated by the diffusion of digital broadcasting services. On the negative side, he pointed out that some companies are transferring their production overseas and investment by competitors Taiwan and Japan is intensifying.
Mr. Ahn observed that market conditions for semiconductors, a key IT export item, is forecast to be more or less stagnant because of reduced demand by through business slowdown, particularly as it effects DRAM and flash memory demand.
As key items such as digital TV, and satellite broadcasting receiver achieve world-leading levels of technology, their exports will continue to rise, Mr. Ahn said. In the following interview, Mr. Ahn gives his assessment for the IT industry in the coming year.
First of all, what is your outlook for domestic IT business in 2005
According to an OECD report in 2004 on Korean IT capability, Korea appeared to rank high internationally in terms of the IT industry's contribution to national GDP as well as to trade among OECD member countries.
But, considering the industry's advanced technology and high quality products, IT exports have plenty of upside potential. Since the domestic IT market is almost saturated, the export option is no longer a choice but inevitable.
At present, Korea is confronting powerful challenges from competing countries such as China, Taiwan and Japan in cellular phones, LCDs and semiconductors, the largest IT items. Yet, if exploit the "test bed" capability of the Korean IT market to the full, as well as the technological edge of the industry's products, I believe that our IT corporations could boost national economic development through exports this year.
What are some of the problems that face IT exports and what steps has the industry taken to overcome them such as convergence and IT target marketing
By November 2004, Korean IT exports to the U.S., China, Hong Kong, and Taiwan accounted for 61.9% of all IT exports. Among them, the U.S. and China (including Hong Kong) accounted for 47.9% of the total. In this regard, diversification of overseas market is indispensable. Particularly, new emerging markets such as BRICs and untapped regions are important markets for business to focus on for the long haul.
Moreover, the volume of exports of the three largest export items (semiconductors, mobile phones, and monitors) as of 2003 accounted for 22.8% of all national exports. Such excessive dependence on these three items is another obstacle for us to overcome.
What domestic IT corporations must do to take their exports to the next level is to sharpen their global marketing ability and develop a firm brand image. In spite of excellent technology and products, business opportunities have been lost due to lack of awareness of global business issues and brand management.
What support measures can Kotra offer, such as help in diversifying a companys IT markets
Kotra's IT & Cultural Industry Export Center has an ongoing export support program to pioneer emerging markets through its 105 overseas trade offices in 74 countries.
Last year, the Center arranged export opportunities for domestic businesses by inviting influential buyers from the Middle East, Africa, Brazil, and India.
In the case of the CIS region, our Center held a business meeting on the spot by organizing a market pioneering team of domestic IT corporations. Specifically, in the case of China, we have benefited by extending our reach beyond the Shanghai/Beijing axis to buyers in hitherto unexplored markets such as Tsingtao.
Likewise for this year, Kotra's IT & Cultural Industry Export Center will strengthen business cooperation between buyers from the four nations of BRICs as well as major countries of the Southwest Asia and promising domestic companies by again holding on-the-spot meetings. We further plan to hold a Systems Integration (SI) road show in the developing countries such as Cambodia, Myanmar, and Sri Lanka and will concentrate our efforts on introducing Korea's developed IT industry and high-potential companies.
What do you consider to be the biggest obstacles to further advances by the domestic IT industry in overseas markets
One of the largest obstacles I anticipate will be the rapid market entry by emerging competitor countries in the IT field. Korean quality is second to none but Chinese and Taiwanese price competitiveness is outpacing our industry considerably in cellular phones, semiconductors and displays, Korea's three top export items.
Although the Korean online/mobile content industry, which includes games, is among the world's most advanced, Chinese, U.S. and European competitors are catching up fast.
Excessive competition between our companies in overseas market is another obstacle the IT industry must overcome. Nevertheless, Korea has huge potential and many opportunities before it, given it is a country that is the most developed wire/wireless IT platform in the world. A case in point is the recent launch of satellite Digital Media Broadcasting (DMB), whereby video images are accessible by mobile phones.
How are domestic IT products assessed in the world market
In 2004 as in 2003, the preference toward Korean cellular phones, displays, and semiconductors continued unabated. Moreover, if satellite/ground wave DMB services become established this year and Korean DMB technology is integrated into broadcasts of the 2006 Germany World Cup and the 2008 Beijing Summer Olympics, we can expect exports of related items to increase by a large margin.
|Mr. Sang-Keun Ahn, head of the IT & Cultural Industry Export Center|
By Yeo Hong Il / email@example.com
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