'A Paradigm Shift to Convergence'

The government plans to establish a master plan for the development of state industry convergence

The government strives to get a jumpstart on convergence by establishing an inter-ministry action plan on the development of industry convergence, based on the master plan for the development of state industry convergence and taking stock of the implementation of the action plan. It has built institutional infrastructure by establishing and entering into force the Act on the Facilitation of Industry Con-vergence, which went into effect on Oct. 6, 2011. The following are excerpts of a written interview between NewsWorld and Kim Jae-hong, assistant minister of the Office of Industries at the Ministry of Knowledge Economy (MKE) in which he spoke about the currents status and future prospects of convergence industries.
Question: Will you tell our readers about the current status of the global convergence market?
Answer: The global economy is fast shifting from an informatization era based on IT infrastructure and communica-tion technology to a convergence era, creating new values through the combination of technologies and industries. The conventional partitioned mindsets could be beset with difficulties in coping with the convergence era based on creative imaginations and emotional values.
At this paradigm transition period, convergence is recognized as a key word for creating new growth engines and jobs. The global convergence market is forecast to grow at an annual rate of 20 percent. Global consulting group, Deloitte, predicted that the global convergence market, valued at $8.6 trillion in 2008, will surge to $20.3 trillion in 2013 and $68.1 trillion in 2018.
In particular, the IT convergence market, centered around smartphones, is prolif-erating fast, and construction, medical, agriculture/food and other fields with lower development recognition levels are stren-gthening their presence through convergence. According to a survey by Deloitte, the global smartphone market, which saw units sold jump from 91 million in 2006 to 211 million in 2008, is likely to sell 460 million units this year. The construction convergence market is predicted to soar from $264 billion in 2010 to $316.4 billion in 2015. The medical convergence market will jump from $160 billion in 2010 to $326 billion in 2015. The development of an artificial eardrum using silk protein, a combination of the agriculture, industrial and commercial sectors, is expected to yield about 25 billion won in annual sales.
Multinational corporations are scrambling to gain the upper hand in the convergence market, which will likely have an impact on their future opportunities. Apple, Google, Amazon, and the like are on a roll as they come up with new convergence products, whereas some world-class companies are seeing their market shares decline due to the bungling of new convergence markets.
Q: What impact does convergence have on the national economy?
A: Convergence serves as not just an essential factor for Korean mainstay industries to secure a global competitive edge, but also a key means for Korea to gain a comparative advantage in the division of labor among Korea, Japan, and China. The grafting of convergence technologies in production processes can lead to an improvement in production, while new convergence products like hybrid cars can provide an opportunity to reignite the boom of the mainstay industries, which have already reached saturation point. For instance, Samsung Electronics has upgraded the nanotechnology process from 45nm to 32nm to improve packing density by 45 percent.
Convergence can be used as a means for Korea to fend off China, based on an economy of scale, and Japan, by being armed with proprietary technologies. Korea can employ convergence even from downstream industries such as parts, materials, and equipment in order to differentiate itself from China's general-use items and repel its chase. The innovative recombination of conventional technologies and IT technologies, Korea's strength, has led to commercialization within a short period of time and to Korea's sweeping of the convergence markets ahead of Japan. For instance, Korea leaves Japan behind in terms of technologies such as computer graphics and object recognition sensors, but the nation has gotten a jumpstart in the screen golf market by recombining conventional technologies.
Industrial convergence hinges on the successful realization of green growth engines, and small and mid-size companies may be given opportunities to make strides. Key green-growth areas such as the smart grid and LED are the subject of convergence. The more convergence heats up, the more collaboration among companies is required. Smart grid is a combination of electrical technology, network technology (IT), and energy management technology (green technology), while the development of "Awesome Note," an application on schedule management, earns between 700 million won and 800 million won in revenues yearly.
Q: Will you explain the direction of implementation of industry convergence policies?
A: The government in April 2010 announced its industry convergence promotion strategies designed to build infrastructure for industry convergence and secure leading competitiveness in future convergence industries.
It enacted the Act on the Facilitation of Industry Convergence, which took effect on Oct. 6, 2011, for the first time in the world in order to spread convergence to all segments of society, including the economic, industrial, technological, and cultural sectors, and create new convergence markets through the implementation of comprehensive support policies.
The act calls for the introduction of a certification of standard compatibility, which allows a six-month fast-track for the entry of new convergence items into markets if it is delayed due to no certification standards and conditions even though they pose no safety hazards. An industry convergence ombudsman has been commissioned to provide support for corporate market entry by solving corporate complaints about industry convergence and unreasonable restrictions and for recommending regulatory reform. Dr. Shim Young-sup, senior researcher at the Korea Institute for Industrial Economics & Trade has become the first ombudsman. An industry convergence support center was activated on Jan. 30 to effectively cope with a surge of industry convergence policies, provide management support for small and mid-sized companies, and conduct surveys and examinations into convergence markets. In addition, the development of convergence indexes for the proliferation of convergence to all industries, the pursuit of convergence-specific R&D activities and the industrialization of conventional knowledge and culture are under consideration.
Q: Will you elaborate on advanced countries' moves on convergence?
A: The United States, Japan, the EU, and other advanced countries have established national strategies to get a jumpstart in the paradigm shift to convergence, and now are making moves to build legal and institutional infrastructure.
In 2002, the United States became the first country in the world to establish the Nano-Bio-Info-Cogno (NBIC) plan for focusing on four convergence research agendas essential for enhancing human performance and suiting social, technological, and policy demands ― human cognition and communication; health and physical capabilities; group and societal achievements; and national security.
In 2004, the EU set up Converging Technologies for the European Knowledge Society (CTEKS), designating four core areas, including health, education, and informat-ion/telecommunication and setting nine core convergence agendas, including medical health, biotechnology, informat-ion/telecommunicat-ion, nanotechnology/material, energy, and environment/climate change, transportat-ion/aviation technology, social economi-cs/humanities, and space/security technology.
In 2004, Japan came up with its "new industry development strategies" and "Focus 21" to build a strategic foundation for the fostering of convergence industries. Japan has categorized eight convergence industries, including healthcare, environment/energy, and "intelligent" nano parts/materials, life service, entertainment, next-generation comm-unications, mechatronics, and business service, in accord with social and state policy needs.
Q: What are the future plans for convergence policies?
A: This year marks the first year for implementing policies on convergence industries in a full-fledged manner. As the Act on the Facilitation of Industry Convergence went into effect on Oct. 6, 2011, the government plans to establish a master plan on the development of state industry convergence in the first half of this year. A committee for the development of industry convergence, to be headed by the prime minister, comprised of the minister of knowledge economy and other related ministers as well as convergence experts, will be formed to serve a pivotal role in setting convergence policies.
The government will do its best to get a jumpstart on convergence by establishing an inter-ministry action plan on the development of industry convergence, based on the master plan on the development of state industry convergence, and by taking stock of the implementation of the action plan. nw

Kim Jae-hong, assistant minister of the Office of Industries at the Ministry of Knowledge Economy (MKE)