Policy Directions for S. Korea's Robot Industry

Contribution by Policymaker

The Current State of the Robot Industry

The robot industry is a key factor for advancement of various other industries and in itself a promising future growth sector. Nowadays, the scope of the robot industry is expanding from manufacturing robots for diverse types of work to service robots supporting people’s lives including education and housework.

Recognizing the importance of the robot industry, the United States and Japan have launched the National Robotics Initiative and the New Robot Strategy, respectively. In the private sector, global companies such as Amazon and SoftBank are entering the robot market one after another. Especially, Masayoshi Son, chairman and CEO of SoftBank Group Corp., selected the robotics industry as a new growth engine, together with Internet of Things (IoT) and artificial intelligence (AI). SoftBank has acquired two robotics company, Boston Dynamics and Schaft, continuing its investment in robotics.

According to the World Robotics 2016 report from the International Federation of Robotics (IFR), the global robot market grew from US$ 17.9 billion in 2015 to about US$20.4 billion in 2016 and has achieved an average annual growth rate of 10% for the last 6 years. Market research firm Tractica estimated that the global robot industry would soar to US$237 billion in 2022.

At present, the industry is evolving from sales of single products to provision of all-in-one solutions based on software-service combination. At industrial sites, for instance, more and more robots are being integrated with machine vision inspection, predictive maintenance, virtual commissioning, and so on to provide more factory automation services. Examples include Siemensʼ Digital Twin technology, which represents robots and actual production facilities on a computer for simulation for the purpose of smart production. It creates a closed-loop of feedback in a virtual environment that offers companies the best possible design for their products and production processes. In the home robot sector, chatbots like AI speakers and social robots are expected to replace an increasing number of simple robots for cleaning, teaching, etc. Global Market research firm Canalys estimates that AI speaker installed base will reach 100 million worldwide this year. And the KT Groupʼs Nasmedia is forecasting that the AI speaker demand in South Korea alone will increase from one million units in 2017 to three million units in 2018, accounting for 15% of the entire households in Korea.

The Korean Governmentʼs Support for Robot Industry and Current State of the Robot Industry

The South Korean government formed a new team in the Ministry of Trade, Industry and Energy (Formerly the Ministry of Commerce Industry and Energy) back in December 2005 to be in charge of the robot industry. In 2008, a series of government actions and initiatives, including the enactment of the Intelligent Robot Development and Promotion Act, raised the visibility of Korea's push to build a robot industry. The government formulated national plans for the same purpose in 2009 and 2014 based on the law. Since then, it has also focused on enhancing the robot industry by expanding the demand base for robots through market creation and building proper infrastructure.

The robot industry of South Korea broke the two trillion won mark in 2011 and reached 4.5 trillion won in 2016. Currently South Korea ranks fifth, following China, the U.S., Germany and Japan, in terms of manufacturing robot production. DRC-HUBO, a humanoid robot with transformer capabilities, created by the Korean Advanced Institute of Science and Technology, was the 2015 winner of the Defense Advanced Research Project Agency (DARPA) Robotics Challenge. Hanwha Precision Machinery and Doosan Robotics launched a new collaborative robot last year and LG Electronics exhibited serving, porter and shopping cart robots at CES 2018. Many other large local companies are also increasing their investment in the robotics industry.

Still, more continuous efforts by the government, the industry and researchers are required for South Koreaʼs robot industry to further develop and become a new growth driver comparable to existing major industries.

At this moment, robots are mostly used by large automakers and electrical and electronics companies, while small and medium enterprises are underutilizing them. Simple cleaning and teaching robots still account for about 84% of the service robot market, whereas the development and diffusion of more advanced robots for medical and logistics applications has yet to be accelerated.

According to a 2016 survey on the state of the robot industry, the number of robot companies in South Korea totaled 2,127, with 96% of them small companies with less than five billion won in sales. This means most of those companies had a hard time developing technology and marketing their products, which require a lot of financial resources. In other words, new policies are necessary for market creation and future technology development.

Policy Directions

In February this year, the government released a new development strategy for the intelligent robot industry along with four action plans geared toward enhancing industrial competitiveness and creating a “smart country” where humans and robots coexist. The action plans call for accelerating market expansion with collaborative robots and service robots while enhancing the industryʼs supply and demand capabilities by means of parts development assistance and proactive system improvement.

1. Projects for Development and Popularization of Collaborative and Service Robots

The government expedites demand creation by providing small and medium-sized manufacturers with collaborative robots to support the improvement of their productivity. The collaborative robots, which can work with people in manufacturing processes, are expected to become a new solution for those companies suffering from cost- and employment-related difficulties. Firstly, this year, such robots are tested in some processes such as auto parts inspection, LED lamp assembly and sanitary ware assembly. The government plans to expand the supply of robots with proven effectiveness.

At the same time, the government is working on service robot commercialization in the five fields of smart home, medical and rehabilitation, disaster and safety, unmanned transportation, and agriculture. It is planning to help robot manufacturers and clients jointly develop service robots and encourage key clients to introduce the jointly developed robots on a trial basis so that track records can be accumulated.

2. Enhancement of Innovation Capabilities of Robot Industry

Robot parts for driving, sensing and control, which take about half of the robot production cost, are a key factor in determining cost competitiveness. Nevertheless, South Korean robot manufacturers depend on imports from Japan and Germany. In order to enhance their competitiveness in terms of robot parts production, the government is going to come up with a long-term parts development strategy and provide priority-based R&D assistance.

In addition, the government is clustering regional robot industry support agencies while running a council for inter-agency collaboration for regional innovation capability enhancement. It is also training postgraduate-level AI and robot convergence experts with regional colleges such as Seoul National University of Science and Technology and Pusan National University and providing training programs for robot makers and job seekers in cooperation with regional companies.

3. Market Creation and Establishment of Support System

Deregulation is underway for demand expansion and popularization. For example, the government prepared a safety certification scheme so that workers and collaborative robots can work in the same space without more-than-necessary safety measures. Furthermore, the government plans to identify and improve regulations hindering robot popularization and technology development in various fields.

In addition, the government is helping local companies enter overseas markets by, for instance, providing support for sending market exploration teams to promising export destinations and for participation in international exhibitions like IREX in Japan and AUTOMATICA in Germany.

Moreover, it is working on a full-cycle support system for robot companies’ growth. For companies in the stage of commercializing their technologies, consulting on item verification, product development and market access will be provided. In the prototype production phase, training will be provided with regard to production equipment so that prototype robots can be actually made after design completion. In this regard, more robot business coordinators will be prepared for company-specific consulting and more financial guarantee will become available for more investment in robot companies.

4. Enhancement of Social Awareness of Robots

In February 2018, Korea deployed a total of 85 service robots of 11 types, ranging from cleaning robots to robotic fish, at the PyeonChang Olympic Winter Games, aiming to give a high-tech spin to the international event. Additionally, the world's first ski tournament for robots was held during the Winter Games and flaunted Korea's robotic technologies to the world. The government is going to offer more opportunities to experience robots via domestic and international events while holding international robot contests, robot business challenges, and showcases.

Final Remarks

Countries around the world are competing with one another to take the lead in the global robot market in the era of Industry 4.0. South Korea has thus far achieved a remarkable growth despite a rather late start and daunting challenges it has yet to overcome. The countryʼs robot industry will be able to be further developed and become its major export industry if more private-sector investment and systematic government supports are well combined with each other. The government will spare no efforts to expand the presence of the Korean robot industry in the global market.