Chaebols to Support Assigned Regions to Promote Creative Economy

Korea’s conglomerates, or chaebols, such as Samsung, Hyundai Motor, SK, and LG will each be required to build a 1:1 exclusive support system in collaboration with 17 creative economy centers by region.

A high-ranking official at the Blue House, Korea's presidential office, said on August 2, “Samsung Group will be the sole mentor at the creative economy center in Daegu and North Gyeongsang Province, and SK Group will support the Internet-based startups through the Daejeon creative economy center.” In this way, a regional ecosystem integrated with big groups will be created.

Samsung Group will provide comprehensive services such as building infrastructure, forming human networks, offering facility test spaces, locating permanent Samsung employees, and transferring marketing expertise to the Daegu City and North Gyeongsang Province Innovation Center. Starting from the opening ceremonies of Samsung Group and SK Group to be held soon, 14 conglomerates and two Internet portal companies, Naver and Daum, will participate in this program by the first half of next year.

Each chaebol will get a province or city. Lotte will be assigned Busan City; Doosan gets South Gyeongsang Province; Hanjin will have Incheon City; KT will be responsible for Gyeonggi Province; Hyundai Motor gets Gwangju City; Hyosung must partner with North Jeolla Province; GS gets South Jeolla Province; LG will go with North Chungcheong Province; Hanhwa will integrate with South Chungcheong Province; and Naver must partner with Gangwon Province. The integration process with these partnerships will be completed by early next year.

By the first half of next year, CJ will be partnered with Seoul; Hyundai Heavy Industries will join Ulsan City; Daum gets Jeju; and SK will be in bed with Sejong City.

President Park Geun-hye said at the cabinet meeting held in the morning of that day, “Considering the major business areas and regional connection of target companies as well as industrial demand from target regions, big company groups and 17 creative economy centers were matched. I expect more companies to participate in this program and create the best creative economy center based on regional specialties and professionalism to become the next KAIST.”

The government has formed such a matching system in order to stand against global information technology companies and funds including Google, Alibaba, and Yozma, which are increasing their present in the Korean market.

Big groups will actualize the ideas and technologies of startups and venture companies in their regions and support these companies to enter the overseas markets. Big groups will also directly purchase advanced technologies from small companies or make equity investment in such companies if necessary.

The Blue House projected that this matching system between the regions and big groups will become an opportunity for venture companies to draw managerial or financial support from big groups. Big groups will also benefit from this system since they could find out new growth drivers through partnerships with small and medium-sized companies.