KMAC Puts More Energy into
Securing Core Parts Technologies

Nurtures the domestic parts and materials industry with a competitive edge

Local business, research institute and academic circles need to collaborate and concentrate capabilities on exploring the new markets with the awareness of dealing with a crisis. "If Korea fosters the parts and materials industry well, it can benefit from its bridge role in the trilateral trade among Korea, Japan and China,"said Kim Dong-chul, president of Korea Materials & Components Industry Agency (KMAC).
In an interview with NewsWorld, the KMAC president said that the nation badly needs to secure core and basic technologies for which she relies on Japan too much even in the ICT sector, and more efforts need to be made to use IT technologies for parts and materials. The following are the excerpts of the interview.
Question: What is the main purpose for the establishment of KMAC?
Answer: KMAC was inaugurated with a fanfare by reorganizing the Parts Materials Study Corps last July 4 in a bid to nurture the domestic parts and materials industry as the one with a competitive edge in a continuous and systematic manner. The strenuous efforts to raise national competitiveness by fostering the parts and materials industry, a new global economic paradigm, have paid off.
Inauguration of KMAC means the fact that Korea has built up a solid foundation for prospering the parts and materials industry in the future. The Parts and Materials Study Corps has made strenuous efforts to strengthen the competitiveness of the parts and material industry under a master plan, dubbed "MCT-2010"since a special law governing parts and materials was enacted in 2001, but in reality it hit the limitations in achieving the extensive development of the industry. However, KMAC, established under a special measure law on the cultivation of the parts and materials industry, can provide one-stop services ranging from starting up new parts and materials companies, development of technologies, commercialization and market entry.
Major functions and roles of the agency are to strategically develop technologies and improve technological prowess of specialized firms and raise reliability of developed technologies so as to systematically implement government support projects aimed at spurring and promoting technological development of the parts and materials field. Another function KMAC will take charge of is about the development and support of policies related to the parts and materials sector. In a short, KMAC's functions and roles can be summarized into policy research, technology support and commercial-ization.
Q: What steps are in place to counter Korea's dependence on Japanese-made parts that has been deepening despite Korea becoming a global IT powerhouse?
A: Korea has posted parts and materials trade surpluses thanks to a surge in exports of generally used parts and materials since 1998. However, there is a phenomenon in where parts imports from increase in step with a rise in exports due to Korea's higher dependence on Japanese-made core parts and materials.
Under this situation, Korea? booming exports cannot be used to raise the competitiveness of the domestic parts and materials industry, and much of the profits are transferred to Japan.
The nation has made strenuous efforts to diversify import sources to relieve trade imbalance in favor of Japan. Iin reality, the portion of trade between Korea and Japan has been on a decline, but trade of parts and materials is on a constant rise due to Korea's higher dependence on Japanese-made core parts.
In the ICT field we are proud of, Korea's dependence on Japanese-made core parts are too high. The nation badly needs to secure core and basic technologies for which she relies on Japan too much. IT technologies become major technologies of parts and materials, but applications of IT technologies in developing diverse parts and materials are limited. More efforts need to be made to graft IT technologies on to parts and materials.
If Korea and Japan reach an FTA, worry is mounting over a possibility that Korea would submit to Japan's technology dominance.
Korea maintains the No.1 position in the TFT-LCD, PDP and OLED sectors with the largest global market shares - 42 percent in 2003, 43.7 percent in 2004 and 44.1 percent in 2004, respectively. The localization rate of core parts of the three fields was quite lower - 5 percent for OLED core parts, 30 percent for LCD core parts and 40 percent for PDP core parts.
Domestic companies make lower facility investments, whereas Japan is shifting to aggressive facility investments following the decade-long recession. Local business, research institute and academic circles need to collaborate and concentrate capabilities on exploring the new markets with the awareness of dealing with a crisis. If Korea fosters the industry well, it can benefit from its ?ridge?role in the trilateral trade among Korea, Japan and China.
To this end, Korea needs to create innovation clusters and form a network of exerts among business, research instate and campus so as to localize core arts and materials. The nation will have to proactively conduct planning of technological development through such business-research institute-campus networks like the Parts and Materials Study Association as Japan has explored common items through such horizontal networks as exchange associations. Local autonomous authorities will have to shift their role from an initiator to a coordinator element.
Recognizing that Korea's signing an FTA with Japan can create a crisis as well as opportunities, the nation will have to do its best to take over Japan? technologies and know-how through civilian horizontal cooperation.
Q: Would you tell us more about KMAC's think-tank, Study Group?
A: The purpose of the Study Group is to suggest the direction of the development of the parts and materials industry and raise performances by planning tasks on projects designed to build up an infrastructure for the industry. It scrutinizes the feasibility of MCT-2010, a scheme designed to transform Korea into a global ports and materials supplier by 2010, and support the cause. The Study Group plans and valuates implementation options of five key tasks, including support of a plan to make parts and materials companies specialized and large-sized. It designates strategically developed technologies that will preoccupy the future market. The think-tank analyzes domestic and foreign technological trends and technological differences between Korea and advanced countries that can lead to a prior examination of the necessity of developing the relevant technologies and spill-over effects after development. The Study Group establishes a mid- and long-term road map for developing strategic technology items, while studying financial systems necessary for commercialization and mass-production following development of the technologies.
For businesses, the study group will likely recommend implementation plans so that a vision of developing the parts and materials industry can be realized in an innovative way by analyzing the outline and the outcome of the existing policies.
Development strategies for implementing the MCT-2010 will be suggested in the long-term perspective. The government tries to reflect the reality of the industry in planning policies though constant exchanges with the private sector, while civilians are encouraged to participate in the establishment of government policies.
The Study Group prepares and provides data analysis necessary for the establishment of diverse government polices designed to advance the parts and materials industry. It explores future key technologies with a potentially competitive edge through discussions and research among business, research institute and campus in the pre-competitive stage as well as pursues R&D activities and start-up companies.
The Study Group seeks to search and suggest new technological development tasks through analyzing technology trends and exchanges, while contemplating the technology road map (TRM) for exploring government-initiated strategic development items with the participation by a wider range of experts from business and research instate and campus circles and more objective data. KMAC seeks to form a network of research cooperatives with the secretariat being set up at KMAC Policy Research Team.
Q: Can you provide the details of supporting development of basic technologies?
A: As part of efforts to participate in global sourcing and secure basic technologies to raise competitiveness of the parts and materials industry and other sectors, 392 projects have been implemented at a cost of 1,087 billion won during the period between 2000 and June 2005. Out of the outlay, 470 billion has been borne by government funds; 284 billion won shouldered by companies involved; and the remaining 332 billion won by foreign investors. Out of the total, 147 projects have turned out to be a success story; 211 are under way or being supplemented; and 39 have ended up in failure.
Q: Would you introduce the comprehensive technology support projects?
A: A survey on parts and materials makers with more than 100 employees indicated that the biggest hindrance they experience is lack of technology experts. About 8,000 researchers with bachelors and doctorate degrees from Korea Institute of Machinery & Materials and 20 state-funded research institutes as well as research equipment worth 1.4 trillion won are made available to provide technology assistance to applicants.
A survey on comprehensive technology support projects, carried out in 2003, showed that applicants had their technologies improved to levels, equivalent to an average of 85 percent of the top-notch levels in the same industrial category. The findings also indicated that they received economic benefits -equivalent to employing 7.4 workers at a cost of an average of 100 million won in research outlay and an increase of an average of 1.98 billion won in the 2004 sales projection.
KMAC is making efforts to enhance customer satisfaction by implementing client-oriented comprehensive technology support projects while raising synergetic effects by closely linking government-supported projects.
Q: Would you elaborate on the international technology collaboration projects?
A: International technology collaboration projects are designed to secure value-added technologies by combining high-tech, basic technologies of the Eurasian countries and Korea's excellent industrial infrastructure. Under the projects, KMAC provides support to experts of the local parts and materials industry who undergo technical training in the Eurasian countries, while cultivating experts specializing in Eurasian technology as well as languages and culture.
Korea-Eurasian collaboration centers have been set up in Belarus and Ukraine.
KMAC now implements a project to foster 21 people as experts specializing in industrial technology, languages and culture in a bid to promote technology exchanges and cooperation with Eurasian counties.

Kim Dong-chul, president of Korea Materials & Components Industry Agency (KMAC)

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