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Korea to Build 30,000 Smart Factories by 2022 to Improve SME Competitiveness
Manufacturing Innovation through Smart Factory
Korea to Build 30,000 Smart Factories by 2022 to Improve SME Competitiveness
  • By Jung Suk-yee
  • December 14, 2018, 09:44
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The Korean government unveiled plans aimed at boosting the country’s small and mid-size manufacturing companies, including the establishment of 30,000 smart factories by 2022.

The South Korean government, including nine economy-related ministries such as the Ministry of SMEs and Startups (MSS) and the Ministry of Trade, Industry and Energy (MOTIE), held a briefing session on its small and mid-size business smart manufacturing innovation strategy at a council chamber in the South Gyeongsang provincial government building on Dec. 13. At the session, it unveiled measures aimed at boosting the country’s small and mid-size manufacturing companies, including the establishment of 30,000 smart factories by 2022. The government expects that small and mid-size firms in the manufacturing industry will create 66,000 jobs by automating 50 percent of their manufacturing facilities and increase 18 trillion won (US$16 billion) of sales.

The government has supported the establishment of 7,800 smart factories until this year and has allocated 1.21 trillion won (US$1.07 billion) to innovate small and mid-size smart manufacturing facilities next year.

As global manufacturing powerhouses are scrambling to adopt the smart manufacturing innovation strategy, the South Korean government is also seeking to boost the competitiveness of the manufacturing industry by promoting smart factories. Currently, Germany is pushing ahead with “Industry 4.0” which builds smart production systems using ICT technologies. Japan is also pursuing “Society 5.0” strategy which introduces ICT technologies in society as a whole such as manufacturing, agriculture, medical care and other services. China is developing “China Manufacturing 2025” to foster global leading companies in 10 high tech manufacturing sectors, including advanced medical device, biomedicine technology and source material, robot and communications equipment, by 2025.

The MSS will first provide a total of 2 trillion won (US$1.78 billion) in funds to be used in facility investments for smart factories. Policy lenders Korea Development Bank will provide 1 trillion won (US$888.89 million), Industrial Bank of Korea 500 billion won (US$444.45 million) and Small and Medium Business Corporation 500 billion won (US$444.45 million). The government will also create a 300 billion won (US$266.67 million) worth of fund to build smart factories and support suppliers.

The government will also invite more regional entities to create a region-driven support model for the establishment of smart factories. In addition, it will offer incentives for large companies backing the government’s project to build smart factories for smaller firms in a mutual growth index evaluation starting from next year. Four conglomerates – Samsung Electronics Co., Samsung Display Co., Hyundai Motor Co. and POSCO Group – have raised 12.1 billion won (US$10.76 million) and they are supporting 606 small and mid-sized firms now.


Furthermore, the government will set up a big data center and platform to collect, analyze and make use of manufacturing data at the national level next year and incubate 100,000 skilled smart factory engineers by 2022.

The MOTIE and the Ministry of Employment and Labor (MOEL) will also drive the industrial complex innovation strategy and the workplace innovation strategy, respectively. The industrial complex innovation strategy promotes industrial complexes as the base of smart manufacturing innovation and aims to create 10 smart industrial zones by 2022 by forming “smart industrial zone task force.” The workplace innovation strategy is to reduce industrial accidents by creating a new cooperating robot support project in the high risk industry.