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New Strategy Required for Korea as ICT Powerhouse
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New Strategy Required for Korea as ICT Powerhouse
  • By Jack H. Park
  • September 26, 2014, 07:14
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The Samsung MITs M400 was advertised as a combination phone, TV, digital camera, camcorder, GPS, MP3 player, and 2-way radio with the Pocket PC 2002 Phone Edition OS. It had a 300k pixel camera and a 3.5” screen. In 2003.
The Samsung MITs M400 was advertised as a combination phone, TV, digital camera, camcorder, GPS, MP3 player, and 2-way radio with the Pocket PC 2002 Phone Edition OS. It had a 300k pixel camera and a 3.5” screen. In 2003.

 

Korea has failed over and over at globalizing its new technologies and leading the innovation of the international ICT market. Smartphones, 4G mobile telephony, MP3 players, social networks, and mobile payments are just a few examples. Nowadays, however, the U.S. and China, not Korea, are spearheading the growth of these markets.

Alibaba, the largest e-commerce company in China, recently listed itself on the New York Stock Exchange to become the fourth-largest IT company in the world and record 170 trillion won (US$162 billion) in annual sales in its 14th year of business. Its online payment service Alipay is now comparable to PayPal.

China used to be regarded as a follower in the global ICT industry, but it is not so any longer. In contrast, Korea, which developed advanced information and telecommunications technologies least a decade earlier than its rivals, is experiencing a crisis. It has had to witness its innovative technologies commercialized first by the U.S. and China on repeat occasions.

For example, Samsung Electronics unveiled the world’s first Windows OS-based smartphone, MITS, back in 2003. However, it lost the market initiative to Apple due to the lack of a globalization strategy. Wireless broadband, also known as WiBro, was put into commercial use in 2006, five years ahead of LTE, but disappeared after a failure of globalization, too. In the MP3 player industry, Korea has had to lose patent fees amounting to three trillion won (US$2.8 billion). Cyworld, one of the world’s first social networks, lost its market leadership to Facebook, while overlooking the emergence of the mobile era. Danal, which developed a mobile phone-based payment service ahead of any others in the early 2000s, is still struggling to increase its global market share.

Such failures may result in part from the too small local market for globalization, but the most fundamental cause of this situation is a lack of the government’s future ICT strategy. In the past, the government failed to systematically support companies with innovative technologies, and actually hindered them with unusual restrictions besides. For instance, mobile carriers limited WiFi features in the MITS because the government insisted upon the national platform standard of WIPI for feature phones, nipping the growth of local smartphone industry in the bud before it bloomed.

Fortunately, Korean companies have still managed to dominate the global smartphone market. However, Chinese manufacturers are now poised to catch up with them with cheap handsets in emerging markets. In developed countries, Apple is preparing a counter-blow with the iPhone 6 and iPhone 6 Plus.

The ICT industry of Korea has to seek new growth drivers based on its past accomplishments. The creative economy drive of the Korean government cannot be achieved with assistance for venture firms and start-ups alone. More systematic and strategic backup has to be provided for flagship Korean IT companies for them to fare better in the global arena.