SEOUL, KOREA – The Information Professional Association of Korea (IPAK) held a breakfast seminar on July 11th at the JW Marriot Hotel in Seoul. Bong-Ha Rha, director general for information cooperation of Korea Communications Commission (KCC) spoke on ‘ICT development strategy in the smart era’.
Director Rha said “In the smart era, where information can freely transcend national boundaries with the development of information technology, we need to ponder how to prepare for the next generation. For the last twenty years, information technology has been the driving force behind the Korean economy. During this period, the growth rate of IT industry has shown a 13.4 percent increase, demonstrating how the industry has created added value to the economy, considering the GDP growth rate for the same period was a meager 4.7 percent. Today, Korea boasts of leading various IT markets, capturing 27.5 percent of the cell phone market, 37.8 percent of TV, 51.7 percent of memory, and 52.9 percent of display panel market shares. Without information technology, the Korean economy would not have been able to grow as it is now. Even in the network sector, although Korean companies were not initially successful at commercialization of WiBro despite being the first country to do so, they adopted LTE early this time and have succeeded in launching the world’s first nationwide network.”
Having said that, other figures do not paint such a rosy picture of the economy. Over the next five years, the Internet economy within Korea will grow 7.4 percent, far lower than the average of developing markets (18 percent) of the G-20, and still marginally lower than developed markets (8 percent) according to The Boston Consulting Group(BCG). On top of this, Korea has put too much emphasis on the hardware sector, accounting for 84 percent of the total IT industry unlike the U.S.’s even distribution of 42 percent hardware, 28 percent software, and 30 percent in telecom.
“In the smart era, competitive edge no longer remains in the production capacity of hardware, but rather software and contents whose importance is expected to continue to rise, creating high added-value, employment, and spearheading innovation. At the onset of the 1990s, the period of venture boom in Korea, there were plenty of good ideas but many of them died out without success. In Korea, we have a business culture that does not tolerate failures. Even if they succeed, large companies can easily buy the technologies and personnel, leaving the software companies deprived of core capacity. We need to learn from the case of Silicon Valley where failure is accepted and small companies are more respected, working in combination to make the U.S. a strong player in the global market,” he explained.
He added that, “In the digital eco-system, innovation is of utmost importance, and stagnant innovation leads to the passing of society. It is like going upstream on a boat. If not moving forward, you will be swept away rather than maintaining yourself. Steve Jobs created a new concept of the platform. It is a place where trains come and go, and passengers meet. I strongly believe that people who manage platforms can also control money. In the past, users had to buy contents, service, and devices separately. However, with the appearance of the Apple’s integrated platform, users can obtain contents, music, and news via online services such as iTunes and Appstore and through devices such as the iPad and iPhone. Apple swept the initial market of the smart era, generating a new digital eco-system. With the innovative idea, Apple, ranked 8th in 2007 in terms of market capitalization, jumped to the top within five years.”
“In Korea, there have been voices of concerns about the monopolistic structure of a few large companies – often regarded as being slow at innovation and showing jobless growth. SMEs, which could be the window of innovation often lack software capacity and competitiveness. KCC is currently supporting software SMEs through diverse programs such as global K-startup. However, the government has limitations in promoting their growth. They can support but cannot buy their products and services. SMEs themselves must be able to survive in the global market with creative ideas and competitiveness.”
“As part of our ongoing effort, KCC coined a new term, the creative knowledge industry which refers to utilizing online tools and other information services such as software, contents and media based on creative ideas and knowledge which are highly labor-intensive. Backing the digital eco-system, we will put more effort forth to foster creative and competitive content and software sector, accelerating the economic growth and job creation,” Director Rha said.