Korea needs IT innovation to thrive

Korea is losing its competitive edge in the information and telecommunications industry, said Derek Lidow, chief executive officer of iSuppli Corp., a U.S.-based global market research firm. In a press conference yesterday at the Seoul Sheraton Walkerhill in eastern Seoul, Mr. Lidow said that Korean electronics products and other IT devices such as liquid crystal displays, LCD televisions, monitors, and cell phones are losing market share. “To remain competitive, South Korea must change its approach to high-tech industries, focusing more on entrepreneurial innovation and less on lower-margin commodity products,” he said. He said that Korea’s products are losing out to competitors because IT companies are taking a passive stance on investment. “South Korea is being out-invested. [IT firms are engaged in] capital intensive businesses and the capital market here in Korea is not open enough,” he said. Based on research conducted at iSuppli, Mr. Lidow cited the LCD market as an example. He said that in the first quarter of last year, Korea was No.1 in the global market, with a 48.8 percent share, followed by Taiwan with 41.8 percent. Studies at iSuppli since then, however, showed that in the first quarter of this year, Taiwan had a 52.2 percent market share; Korea’s market share had dropped to 37.4 percent. Mr. Lidow said that this was because in Korea, two large companies dominate the market, whereas in Taiwan, almost 10 companies compete with each other and experiment with innovative ideas rather than invest in strengthening their market status. He noted, however, that these problems could not be solved solely at a corporate level. “Korea must encourage entrepreneurial innovation through the creation of more competitive private investment funds and industrial incentives. Without that, it will be strictly limited by the investment of a handful of large companies preoccupied with defending their position, rather than being appropriately aggressive and risk-taking in innovating in the global market,” he said. by Wohn Dong-hee