High hopes for Daedeok cluster

Daedeok Science Town, Korea’s technological center in Daejeon, will become part of the Daedeok Research and Development Special Zone in the next decade as part of the nation’s long-term plan to turn the area into the Northeast Asian hub of science and technology. Through legislation that went into effect July 28, the government hopes to achieve 30 trillion won ($30 billion) in annual sales and 500 billion won in patent royalties by 2015. Its goal is to have the center host 3,000 domestic technology firms and 20 foreign research and development labs. Korea’s Science & Technology Policy Institute is drafting strategies for development of the R&D cluster. Meanwhile, the Ministry of Finance and Economy and Daejeon’s municipal government have said they will finalize supportive measures, such as tax breaks, by September. The road to success, however, has been rocky at best for Daedeok. No director has been elected to spearhead various projects for the special R&D zone. The opening ceremony for the cluster, which was supposed to be on July 28, has been postponed indefinitely until a director is chosen. Kim Sung-gyu, head of the Daedeok R&D Special Zone Planning Team at the Ministry of Science and Technology, downplayed concerns about the immediate future of the development project, saying that once the director is elected, “everything will be a smooth ride.” With or without a director, the R&D zone still has a way to go to be mentioned in the same breath as Silicon Valley, the tech center of the United States. First, the town of Daedeok is currently lacking top-notch local corporations that might establish their research centers there, helping to promote the area. Large conglomerates are considered critical because their R&D labs are testing grounds for new technologies. The presence of Nokia, the world’s biggest cell phone maker, in the Oulu cluster in northern Finland, has been the impetus behind the area’s growing attraction as an information technology hub. In the region alone, Nokia has more than 3,000 small and medium firms supplying it with various parts, 300 of which are first-tier suppliers. Bringing Korean companies to Daedeok to act as its Nokia will come with a price tag. Korean firms have established 60 R&D labs overseas, and 15 of them are in China, second to the 17 in the United States. Comparatively inexpensive labor is the main reason for entering China. “There is basically a similar-sized talent pool for both countries,” said an official with online gamemaker NCsoft Corp., which has a research center in Beijing. “But our costs in China are about half of what they would be in Korea. We’re really happy with our Chinese operation.” Korea Industrial Technology Association’s survey and research team leader Jeong Hae-hyuk said in order for the Daedeok cluster to be successful, it must become as desirable a market as China is for large companies. For small and medium businesses hoping to invest in Daedeok, the cluster’s management must provide an environment conducive to secure investment. To do so, Park Han-ho, chief executive of Daedeok-based biotechnology company Bioneer Corp., said a system must be in place to grant intellectual property rights for all research and development projects in the Daedeok zone. Under Mr. Park’s proposal, if a company with a patent goes bankrupt and is acquired by another, it could still ensure financial compensation for its investors through its patent royalties. Another problem the Daedeok zone faces is that when it comes to overall achievement in research and development, the whole is less than the sum of its parts. In other words, given the talent of individual researchers, analysts say the Daedeok Science Town has underachieved. There is also criticism about the incentive system, which is geared toward individual accomplishments. Experts say that tends to block the flow of information sharing among researchers. Cho Hyun-jung, president of the Korea Venture Business Association, said the Daedeok researchers should have regular gatherings where they can feed off each other. “The researchers must try to learn from each other’s successes and mistakes,” he said. “With more efficient exchange of knowledge and information, I am sure Daedeok will become a strong cluster.” by Kim Pil-kyu, Yoo Jee-ho