Wed, Nov 11, 2015 - Page 12 News List

S Korea’s techies strike out on their own

The nation is investing in small start-ups and the creative economy so as to wean itself off its dependence on the family-run conglomerates that built its economy

By Sam Kim and Jiyeun Lee  /  Bloomberg

A pocket calculator is seen on steel products stacked at a steelworks in Seoul, South Korea, in July. South Korean has shifted its investment strategy away from the chaebols to start ups.


Passengers stepping off the high-speed train in Pohang station in South Korea are greeted enthusiastically by a dog. It’s a robot.

In the station concourse, five little automatons dance to a song by K-Pop girl band Exid.

This is South Korea’s steel city, the birthplace of Posco which fed the country’s industrial rise to become the world’s biggest producer of crude steel by the end of the last century. Yet, nowhere better illustrates the efforts to wean the country off its dependence on the giant companies that transformed the economy.

Posco was part of the industrial plan championed by former dictator Park Chung-hee, which gave rise to the family-run conglomerates, called chaebol, that still dominate the economy, groups like Samsung and Hyundai. Now his daughter, President Park Geun-hye, is trying to roll back their influence and encourage high-tech entrepreneurs to create a “second miracle on the Han river.”

“What is of paramount importance if Korea is to better compete with the rest of the world is to enable young Koreans with creative ideas to freely take on the challenge of starting a business,” Park said on Sept. 25 in written answers to Bloomberg News. “Groundbreaking changes are sweeping across our startup and venture communities.”


She said that the number of newly established business entities exceeded 80,000 for the first time last year, when venture investments reached the highest level.

The visions of Park and her father merge in Pohang. Here are steel mills, chemical plants and shipyards. Here also are Posco’s Pohang University of Science and Technology, a light accelerator, one of the country’s biggest clusters of scientific research centers, and a robot museum.

A block away from the museum is a “creative economy” center, one of 17 startup incubators that are part of Park’s US$18-billion program to boost entrepreneurship.

South Korea isn’t the only developed country trying to replicate Silicon Valley’s cauldron of innovation, but the efforts of successive presidents to boost science and technology give it an unusual edge. The country has raised spending on research and development every year since 1991, lifting it 20- fold in the time to US$15 billion, and putting it first in R&D in the Bloomberg Innovation Index.

It is also one of the most-wired nations on Earth. It has the sixth-highest number of fixed broadband subscribers per 100 people among OECD nations and the fastest Internet download speed.


Yet much of that success is due to the very entities that have been criticized for stifling creativity and innovation. Companies like Samsung, the world’s biggest maker of smartphones and memory chips, have traditionally creamed off the best graduates from the top colleges every year.

“Big corporations were safe throughout most of the 20th century, but they have been challenged by global competition, the drive for low wages, international mergers and acquisitions and the growth of multi-dimensional data analytics,” says John Howkins, a British consultant who coined the term “creative economy” in his 2001 book. “It is now safer for someone to take charge of their own destiny, develop their personal portfolio of skills and move between a cluster of employers and clients.”

With South Korea’s big corporations increasingly being squeezed by competitors in China, some of the nation’s brightest minds are heeding that call.

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