South Korea has recently been in the news owing to the activities of the North Korean Government making unsettling moves towards its’ neighbour. But it is not about the dangers to global peace that such manoeuvres could engender if they were to get out of control that I wish to address.
Further to my last week’s blog, in the wake of an EIF fact-finding study visit, entitled ‘Examining Asia’s dynamic digital development’ (see Blog 12 April 2013), this blog focuses on the exceptional attention that South Korea (Korea from now on) has paid to developing its Information and Communications Technology policy (ICT), giving it broadband speeds we can only dream about in the UK. Observations noted below have been drawn from discussions with those involved in the industry there, including visits to such companies as Ericssons-LG, Nokia/Siemens and Samsung.In a recently published Global Information Technology Report, issued by the World Economic Forum, Taiwan ranks just above Korea in its “Networked Readiness Index”. But the chart below shows that Korea tops global rankings for wireless broadband connectivity, and currently has more broadband subscriptions than inhabitants. How has it arrived at this elevated position?
OECD 8th February 2013
Korea is a densely populated country of around 50 million people, with 10 million people in its capital Seoul alone. Since the Asian debt crisis in the late 1990′s, the Korean Government has made investment in R and D a top priority. Currently, R and D investment is about 4% relative to GDP, ranking Korea second in the world (see graph below). The ICT component accounts for about one-third of total R and D expenditure, (about 15 billion dollars). With this emphasis, the ICT industry has annually contributed between 20% to 30% of total exports over the past decade.
What motivated this focus on ICT investment was not only that they recognised the importance of ICT driving the Korean economy, but also the ability to give them a competitive edge in global markets. As a result, ICT has become an embedded technology applicable to other industries, helping to increase added-value. Telecommunications in Korea are ranked No.1 in the world for nearly every platform: fixed, 2G, 3G and 4G. Impressively, the Government has set the target to offer connection speeds of 1Gbps by 2013 on the fixed Ultra Broadband Convergence Network (UBCN).
The Electronics and Telecommunications Research Institute (ETRI) sets out how LTE (or Long-Term Evolution) has developed since its introduction in early 2011 in Korea to become the mobile communication standard for the 4G network. In recent months, there has been a phenomenal uptake of 4G, with the expectation that around 60% of the Korean population – 30 million people – will be LTE subscribers by the end of 2013. This system is expected to provide a maximum transmission speed of 600 Mbps, generating around $300 billion in revenue for Korean manufacturers between 2015 and 2021.
During our meetings, it became clear that customer demand (individuals as well as enterprises) is one of the main factors for the rapid development and deployment of innovative technologies. Not only in what they want, but how much they are prepared to pay for it. The ability of the Korean companies to address these specific requirements and recognise cultural differences that shape certain markets are key to success.
Such focused investment in the digital economy would not be possible without a clear strategy from the Government. This is motivated in part because Korea is a country with no natural resources, and the understanding that a connected society is vital for its success. Koreans have an open cultural attitude to new technologies and have a strong desire for learning new skills. As part of its strategy, the Korean government has developed eCommerce, focussing on improving state-of-the-art broadband and logistic infrastructure. A contribution gratefully received by Korean firms that have consequentially been able to thrive in the hi-tech sector due to ubiquity of access, enabling business to grow and compete, boosting growth and jobs.
Thus the Korean Government, through long-term vision, has recognised how the digital economy has the potential to spur growth and jobs. They have put in place the building blocks required to create a digital economy. The Digital Revolution is taking place due to government investment in digital infrastructure, focus on education for highly skilled labour and investment in research & development within firms to make sure the latest products suit market needs.
How should the European Union and more specifically the UK, respond to the rise of Asia and its Digital Revolution? That is for discussion in next weeks’ blog.