'Korea Strives to Act as First Mover, Not Fast Follower?'

MKE Minister Choi unveils policies to develop Korea into an industrial power

Korea has so far pushed 'catch-up' policies toward advanced countries, but now is the time for the nation to take the lead as a 'first mover'in the world, coupled with economic growth based on balance and harmony,'Ministry of Knowledge Economy (MKE) Minister Choi Joong-kyung said.
"The nation, which saw the economy gallop 6.2 percent last year, emerged as the seventh biggest exporter in the world, and it aims to chalk up $1 trillion in trade during this year,"the minister said.
MKE Minister Choi enumerated policies to nurture Korea into a full-fledged industrial power during his written interview with NewsWorld. The following are excerpts of the interview he held on the occasion of the anniversary of Commerce Day.

Question: Will you tell our readers about the government"s vision and strategies to develop Korea into an industrial power?
Answer: A full-fledged industrial power may be described as a first mover that executes a leadership role over the world with a strong foundation for economic growth based on balance and harmony. To this end, the government should implement such policies as shared growth between large- and small-sized firms, the nurturing of SMEs and midsize hopefuls, the enhancing of the quality of working life at industrial complexes, the creation of new green-growth engines, the strengthening of ties with emerging markets, the exploration of advanced markets through FTAs and the fostering of field manpower.
Korea has so far pushed 'catch-up' policies toward advanced countries, but now is the time for the nation to take the lead as a "First mover" in the world, coupled with economic growth based on balance and harmony.
The nation, which saw the economy gallop 6.2 percent last year, emerged as the seventh biggest exporter in the world, and it aims to chalk up $1 trillion in trade during this year. But internal and external uncertainties, including crude oil price hikes, the 9.0-magnitude quake in Japan and the appreciation of the Korean currency against the dollar, have mounted, and the Organization for Economic Cooperation and Development reported bleak prospects for potential growth that would fall from 4.0 percent during the period between 2010 and 2011 to 2.4 percent during the period between 2012 and 2025. There should be a long-cherished task of spreading to all corners of society the spillover effects of the nation's strong showing in such main industries as automobiles.
We are focused on the following policies to nurture Korea into a full-fledged industrial power: First, the government strives to redouble efforts to ensure shared growth between large-and small-sized firms, strategically develop SMEs and midsize superstars and enhance the quality of working life at industrial areas, spaces of the national economy. Second, we must accelerate our bids to make convergence and green growth industries the new growth engines while strengthening cooperative ties with emerging markets through the provision of a grand package of resources and industrial offerings and exploring advanced markets through FTAs. Third, we will do our utmost in fostering diverse industrial manpower by giving preferential treatment to people from engineering departments, lest a mismatch of manpower demand and supply should undermine industrial competitiveness, then securing field manpower is considered more essential to realize leading tasks.

Q: What? the significance of observing Commerce Day and who's on the winners list?
A: Commerce Day is observed on the Wednesday of the third week of March each year in order to give encouragement to those who have contributed to the development of the national economy through excellent corporate management as well as to pledge to promote a competitive edge and continuous development. This year's anniversary ceremony took place at the COEX Auditorium Hall in Samseong-dong, Seoul, on March 16 with Prime Minister Kim Hwang-sik and more than 1,000 people in attendance. The government awarded 245 prizes, including 10 orders, six medals and 15 presidential citations.
The top honor, Order of Industrial Merit, Gold Tower, went to BASF Korea President Lee Man-woo and Aekyung Chemical CEO Lee Joo-hong. The BASF Korea president was praised in recognition of taking the lead in the continuous attraction of foreign investments and for improving the quality of environmentally-friendly and high-efficiency products as well as contributing to enhancing the competitiveness of the related industries. The Aekyung Chemical president was honored for localizing unsaturated polyester resin (UPR) for wettability for the second time in the world, contributing to the development of the domestic display industry.
Deloitte Korea President Lee Jae-sul and Jinro CEO Yoon Jong-woong were presented with the Order of Industrial Merit, Silver Tower.

Q: Will you elaborate on 2011's export prospects and plans to develop Korea into a trading power?
A: Korea continues to make a strong showing in exports by logging $131.8 billion in overseas shipments in the first quarter of this year, a 30.8 percent year-on-year surge. Export prospects for the year are upbeat as the nation is forecast to export $513 billion in 2011, a 10.0 percent year-on-year jump, according to a report released at the end of last year.
Given the United States's secent economic recovery and emerging markets continuous growth, the International Monetary Fund (IMF) revised upward its growth forecast for the global economy from 4.2 percent in October 2010 to 4.4 percent this past January. The IMF readjusted upward its growth forecast for advanced economies to 2.5 percent, up 0.3 percentage points from 2.2 percent, and that for emerging economies to 6.5 percent, up 0.1 percentage points from 6.4 percent.
The MKE is taking proactive measures to cope with such new trading circumstances as trade multipolarization, cut-throat global competition and free trade agreements in order to make the nation a trading power in an era of G-20 countries by making the most of the achievements it has so far made in the nation's history of trading. In an effort to aggressively tap emerging markets, industrial collaboration with emerging markets will be reinforced through ranking channels as well as the expansion of marketing support for exploring the markets.

Q: What steps are in place to develop the nation into a system-on-chip (SoC) power?
A: The global SoC market, whose size is roughly one-third of the memory market, is considered to be the key to IT convergence that could enhance the competitiveness of the nation's major industries, including cell phones and automobiles. Korea has the world's top-rated competitive edge in memory semiconductors, but the nation relies extensively on imports in the SoC area. Korea had a 50 percent share in the global memory semiconductor market in 2010, compared to a 3 percent share in the global SoC field.
It is essential to nurture creative manpower and maintain shared growth between large- and small-sized companies to become a global SoC power.

Q: Will you elaborate on policy tasks to promote the automobile industry under the green growth paradigm?
A: Prime Minister Kim Hwang-sik presided over the 10th meeting of green growth last Dec. 6 in which related ministries jointly announced strategies and tasks to become among the world's top four green car powers. They will be implemented in accordance with a green car mass-production roadmap, the development of the top eight core parts, the proliferation of green cars and the expansion of charging infrastructure.
The green car roadmap calls for the Korean automobile community to make aggressive investments into five green car segments in the next five years.
Starting this year, the government will concentrate on the localization of the top eight core green car parts, including electric vehicle motors, air handling units, batteries and chargers, hybrid vehicle power transmission gears, fuel cell stacks, core parts of clean diesel common rails, and post-treatment systems by 2015 on a step-by-step basis.
In cooperation with related ministries, the MKE will determine action plans on the development of "Electric vehicle cities" fitted with comprehensive electric vehicle infrastructure, including charging and other auxiliary services, by the first half of the year.

Q: What do you say about the development of the domestic steel industry and R&D tasks's
A: In a bid to address the changing conditions of the global steel industry, including raw material price hikes, the emergence of supersize steelmakers like China and restrictions on greenhouse gas emissions, the Korean industry has such pressing tasks as the production of value-added steel products, differentiating itself from other countries, and the reduction of CO2 emissions in the course of steelmaking in keeping with stringent regulations on greenhouse gas emissions.
The government plans to concentrate its support on the development of technologies related to value-added steel products tailored to meet such future demands as next-generation automobiles and environmentally-friendly energies. It is focusing on the development of technologies related to C02-free steelmaking using hydrogen, since the conventional method of steelmaking based on coal inevitably emits CO2.

Q: Will you explain the current status and prospects of developing world-best products?
A: The MKE has selected products, which ranked in the top five in terms of global market share or have a potential to reach the position within five years, as Korean-made world-best items and their producers annually since 2001 with the goal of boosting the momentum for exporting.
Currently, 553 products and 619 companies were picked as world-best products and world-best corporations on 16 occasions and eight qualifications during the period between 2001 and 2010.
World-best product maker SMEs are entitled to government support for overseas market exploration through KOTRA's assistance for overseas exhibitions as well as technology development, financing and personnel support.
Following a review of past achievements, the designation and support of world-best products will be revamped in a way that the SME's overseas competitiveness can be reinforced by focusing on the exploration of new products and providing support tailored to their needs. Aside from support for overseas branding marketing and overseas on-line marketing, the frequency of world-best exhibitions mainly for exploring emerging markets will be expanded to twice yearly starting this year, including Africa and inland regions of China.

Q: Will you tell us about strategies to nurture such green growth-engine industries as bio-health, nanotech, robots and software?
A: The global bio industry is expected to see explosive growth due to a surge in medical and healthcare demand in an era of aging populations with the value of the global market being forecast to surge from $296 billion in 2008 to $702.1 billion in 2015, according to a report from Interactive Market Systems (IMS). Korea has secured a foundation to advance the domestic bio industry, as the nation has become the third country in the world to introduce regulations on biosimilars and the number of bio venture firms surged from eight in 2000 to 65 in 2010.
In a bid to turn the bio industry into a value-added exporting industry, Korea strives to advance the outcomes of biosimilar projects, including the release of breast cancer and growth hormone biosimilars slated for the second half of the year, while pushing massive R&D investments into the development of new drugs. The nation is seeking to expand production facilities and support for clinical testing, the preconditions for making the bio industry global, while pushing plans to tap such biochemical markets as bioplastics that can replace petrochemicals.
In cooperation with the Ministry of Health and Welfare, the MKE has established a plan to strategically develop 25 kinds of medical convergence equipment, including 3D endoscopes, in order to develop the medical equipment industry, which now depends on imports, into an exporting industry.

NANO INDUSTRY
We're making a feasibility study of the "Nano Convergence 2020," a research & business development (R&DB) project for commercializing nano technologies, calling for appropriating 1.35 trillion won from national coffers over the next nine years. The innovative program is designed to tap the new industries and markets and develop nano convergence technologies on a continuous basis. The government plans to provide support to the development of commercialization business models in the top 10 core strategic projects in the top three core nano convergence areas.
The MKE plans to establish systems for evaluating safety in the whole cycle of utilizing nano materials and products and international standard certification.

ROBOT CONVERGENCE INDUSTRY
The government plans to aggressively push an inter-ministry pilot program and R&D programs to tap the robot convergence industry, a representative convergence industry offering diverse value-added products and services through the combination of conventional and robot industries.
It plans to nurture gifted manpower from the long-term perspective of developing the industry. A "meister school" will be inaugurated next year to meet the shortage of field manpower like other industries do.

SOFTWARE INDUSTRY
The government wants to build a sound software ecosystem through the expansion of divided procurement and shared growth between large- and small-sized firms so that SMEs can be developed into global companies. It plans to focus on fostering high-caliber manpower to help SMEs relieve a manpower shortage.
The government will establish a plan to promote shared growth between software and SoC by June in order to get a jumpstart in new convergence markets.

Q: What steps are you taking to polish the competitive edge of the domestic automobile, shipbuilding and petrochemical industries?
A: We seek to provide support to develop basic core technologies in the emerging electric vehicle market as well as to localize parts that are below par compared to counterparts of advanced countries and improve their efficiency.
The government is encouraging overseas entry of Korea's excellent parts manufacturing technologies while strengthening international joint research activities to upgrade green car technologies.

SHIPBUILDING INDUSTRY
Korea will develop the "green ship" field for sharply reducing greenhouse gas emissions and improving energy efficiency during the 10-year period between 2011 and 2020 to shift the shipbuilding industry paradigm and get a jumpstart in the new market.
The government and the private sector will develop offshore plant systems and core equipment for exploring deep-sea resources during the six-year period between 2012 and 2017.
A real-time after-sale management system is now in place to immediately respond to global after-sales requests as part of efforts to expand the nation's direct exporting of Korean-made shipbuilding equipment abroad.

PETROCHEMICAL INDUSTRY
The domestic petrochemical industry needs to enhance production efficiency to ensure continuous growth and concentrate on its corporate capability to strengthen its presence in big core business areas with growth potential. Petrochemical companies are required to enhance raw material and energy utilization rates within petrochemical complexes to improve production efficiency while strengthening mutual corporate cooperation to focus on value-added business arenas, departing from the conventional business structure of general-purpose, wide-use items. The MKE will announce within the first half of the year steps to ramp up the competitiveness of the petrochemical industry.

Q: What steps are the MKE taking to help the photovoltaic power industry strengthen its presence abroad?
A: The government will see to it that core basic technologies be secured and parts, materials and equipment be developed to maintain price competitiveness and facilitate overseas market exploration. One or two test-beds for providing support for SME's testing analysis, performance testing and commercialization will be set up, while the government will come to the aid of SMEs in exploring overseas markets by operating overseas market exploration teams and supporting market surveys, feasibility studies and others. A renewable portfolio standard (RPS) system requiring power companies to supply a given portion of new and renewable energy will be in place along with the additional requirement of supplying 1.2GW of photovoltaic power slated for the period between 2012 and 2016 to boost the domestic demand of the industry.

Q: Will you explain measures to ameliorate the development of free economic zones (FEZs)?
A: Six FEZs have been under construction since 2003 when the FEZ system was introduced with the goal of making Korea a business center of Northeast Asia. Even despite its intrinsic characteristics of long-term development, the reality is that the development of FEZs is below expectations in terms of foreign direct investments and development progress.
The MKE established plans to invigorate free economic zones last September. A revision of the special act on the development of FEZs, approved by the National Assembly on March 11, 2011, will take effect on Aug. 4.
Based on these, the government will strive to revamp the development of FEZs through choice and concentration in a rational fashion and gain ground in the development process.
Within this year, the MKE will establish an FEZ master plan designed to present differentiated development models based on each FEZ region's characteristics and comparative advantages in what is targeted to set up an economic win-win approach with Japan and China. nw

Photo on courtesy of MKE