The South Korean government has declared to actively promote the establishment of smart factories, but Japan is found to control 40 percent of related technologies. Accordingly, there is growing concern that the Korean government’s plans to promote new industries may suffer a setback if Japan decides to expand the scope of its export curbs in the future.
Japan accounted for 37 percent of the global smart factory market as of 2017, according to a report released by the Bank of Korea on July 21. The figure is much higher than Germany’s 12.5 percent and the United States’ 9.5 percent. A smart factory refers to a highly digitized and intelligent facility with the whole business process ranging from product designing and development to production and distribution based on IT.
Japan has secured a high level of technology in the component and robot sectors which are needed to advance smart factories and establish standards. The United Nations (UN) said Japan’s comparative advantage index in the component sector stood at 1.56 as of 2017, which was higher than 1.26 of Germany. It is also the same story with the industrial robot sector. Japan’s trade specialization index in the robot sector has remained at over 0.95 since 2000. The trade specialization index shows how much a product is specialized to exports. If it is close to 1, it is considered complete export specialization.
Therefore, experts point out that South Korea should also scramble to set up smart factories because it will be hit hard when Japan expands its export curbs to technologies related to smart factory, which is the main strategy in the era of the Fourth Industrial Revolution.