Lagging in the IT Hi-tech Race?
Lagging in the IT Hi-tech Race?
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  • 승인 2006.06.01 12:01
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When a leading global IT market research firm raises the yellow flag on Korea's IT industry losing its competitive edge in the information and telecommunications industry, both the private sector and relevant government bodies need to sit up and take note. A careful assessment is needed of the seriousness of the problem and appropriate countermeasures must be implemented without delay. Although Korea is globally recognized as an info-tech powerhouse, it appears to be losing its competitive edge in the high-tech segments At a press conference held in Seoul ahead of last month's Seoul Digital forum, Derek Lidow, chief executive officer of iSuppli Corp., a U.S.-based firm specializing in Applied Market Intelligence, said that Korean electronics products and other IT devices such as liquid crystal displays, LCD televisions, monitors, and cell phones are losing market share. He is quoted by Korea's JoongAng Daily as saying, "To remain competitive, South Korea must change its approach to high-tech industries, focusing more on entrepreneurial innovation and less on lower-margin commodity products." He expressed the view that Korea's products are losing out to competitors because IT companies are taking a passive stance on investment, by allowing themselves to be "out-invested" and engaging in capital intensive businesses. He pointed out that Korea is being outspent and outmaneuvered by competitors on multiple fronts. Lidow selected three examples of Korea's eroding hightech competitiveness -- liquid crystal displays (LCD), televisions and handsets, citing the LCD industry as an example. He said that in the first quarter of last year, Korea was No.1 in the global market, with a 48.8 percent share, followed by Taiwan with 41.8 percent. iSuppli research since then, however, showed that in the first quarter of this year, Taiwan had a 52.2 percent market share, while Korea's market share had dropped to 37.4 percent. According to Lidow this was because in Korea, two large companies dominate the market, whereas in Taiwan, almost 10 companies compete with each other and experiment with innovative ideas rather than invest in strengthening their market status. He noted that these problems could not be solved solely at a corporate level. "Korea must encourage entrepreneurial innovation through the creation of more competitive private investment funds and industrial incentives. Without that, it will be strictly limited by the investment of a handful of large companies preoccupied with defending their position, rather than being appropriately aggressive and risk-taking in innovating in the global market," he said. Despite Korea's remarkable ascendancy in the global marketplace from the late 1990s to 2004, this success was built on two principles - strong investment and operational efficiency. According to Lidlow, Korea now needs to advance to the next stage. The two principles that worked for the past five to eight years might not work for the next five years. To meet the challenge, Korea needs to nurture a new corporate environment where innovations mushroom by promoting venture and private equity funds. Another idea put forward is that Korea must encourage entrepreneurial innovation through the creation of more competitive private investment funds and industrial incentives, including both venture capital and private equity investment funds. But every cloud has a silver lining, as the American analyst correctly pointed out, saying that thanks to Korea's leadership position, it is in an advantageous position to be an IT incubator of new ideas. Korea is fortunate to possess one of the world's best IT infrastructures, with four in five homes having high-speed Internet connections, and four out of every five people carry wireless Internet-enabled cell phones. The message is very clear, however. We cannot afford to be complacent in the face of aggressive regional competition and the issues raised by outside analysts of Korea's IT industry need to be urgently weighed and remedied.

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