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[In-depth interview]Japan, China gaining against Korean IT

A good environment for venture companies needs to be created so that a global venture company like Google can emerge in Korea.

July 25,2007
Chin Dae-je, Lee Sang-chul and Yim Chu-hwan
Three leaders in information technology in Korea ― Lee Sang-chul, president of Kwangwoon University; Yim Chu-hwan, chairman of the Korea Information and Communication Society and Chin Dae-je, president of Skylake Incuvest ― discussed the future of the industry recently.
In information technology, Korea still lags behind Japan, while China is catching up with Korea, they said.
They agreed the solution is for local IT industries to develop new services, taking advantage of the existing infrastructure. There is plenty of room for local technology industries to develop new services, they said, because Koreans are early adopters.
Information technology can be applied to numerous industries and services, including medical and automobiles. For that purpose, the government, businesses and universities need to work together and look at the big picture, they said.
Chin: Semiconductors, personal computers, mobile communication and broadband have led information technology industries for several decades, but I don’t know what’s next.
Yim: It’s true. Just look at the Information Society Index. The World Economic Forum placed Korea 19th, five notches below its 2005 level. New industries like Internet Protocol television weren’t able to move forward because of conflicts of interest within the government.
Lee: Korea’s IT industries are at a crossroads. We need to break out of our preconceptions and look at IT industries from a different industrial point of view. Information technologies is widely used in our homes and lives. But even if we try to make progress, the relevant laws have been obstacles. People in the industry say the crisis is something new, but it has always existed. The government has just relied on past growth and neglected to find a future growth engine.
Chin: In early 2003, when I was the chief executive officer of Samsung Electronics, I lectured to whoever would listen that they need to enter new businesses quickly because China would be catching up in four to six years. But nobody seemed concerned. Now the crisis has come, and everyone is baffled.
Lee: Korea is behind Japan and other developed countries in information technologies, while China has the advantages of a bigger market and lower costs. Korea has done well and come so far, but for the last few years, Korea has done nothing. I feel like Korea has hit a wall.
Yim: New IT services like Internet Protocol television are delayed because of disputes between different government ministries and that is hard to understand. Thirty-two countries are already offering Internet Protocol television services. If Korea had introduced IPTV two or three years ago, huge investments could have been made, creating new jobs and exports.

Recently, Intel decided to pull its research and development center out of Korea. The three IT leaders agreed regulations are acting as obstacles to business activities.
Chin: When I was the minister of information and communication, I recruited research and development centers for 12 foreign IT companies. Recently, they have started moving to China. To keep foreign companies here, there should be more educational, medical and financial incentives for foreigners.
Lee: The government feels uncomfortable about foreigner-only schools and hospitals being built in Korea because they seem to only benefit foreigners. If the Songdo new town in Incheon had been opened up for development earlier, more foreign companies could have entered. The local market is small, the labor costs are high and the technologies are not as advanced, so no foreign company wants to do business in Korea.

The three panelists said the past achievements of local IT industries have not been achieved in a bubble. The three agreed that IT industries can still be a growth engine. For that reason, they said, Korea needs to find and educate talented human resources and nurture venture companies.
Lee: The greatest resource of our country is its people. Our consumers are another asset. When a Japanese company develops a digital camera, it distributes the product in Korea first. Once Korean users post their opinions about the product on the Web, the Japanese company refines the product and then sells it worldwide. Because of its consumers, Korea has become a test bed for information technologies.
Yim: The future of IT industries should be driven by such consumers; with their help, Korea can develop a global IT product. Our education also needs to find a place. Graduates from Pohang University of Science and Technology are giving up science and engineering and entering medical schools. If this continues, there will be no future for local IT industries.
Chin: A good environment for venture companies needs to be created so a global venture company like Google can emerge in Korea. There is a saying, “Spray and pray,” which means to invest and pray ― in other words, invest carelessly. Because investors are putting their money in venture companies without much knowledge, companies that should live, die and companies that should die, live. There needs to be an environment that encourages investors to put their money in good technology which they can trust.

The three also said drastic changes are needed in the mobile telecommunications sector.
Lee: The domestic market is already saturated. Mobile telecom service providers need to change to survive. When providing wireless broadband services, they need to do more than offer voice and data transmission services.
Yim: Mobile telecom companies should expand by taking advantage of information technologies.

* Chin Dae-je, 55, was chief executive officer of Samsung Electronics. A memory chip expert, he contributed to the success of Korea’s semiconductor industry. He was the minister of information and communication for three years from 2003. Last year, he founded the venture capital company Skylake Incuvest.
Lee Sang-chul, 59, was the CEO of KTF and KT. In 2002, he was appointed minister of information and communication. Since 2005, he has been president of Kwangwoon University. He helped install high-speed Internet networks around the nation.
Yim Chu-hwan was the head of the Electronics and Communication Research Institute, where he worked for 20 years. He led the development of wireless broadband and digital media broadcasting.


By Lee Won-ho, Kim Won-bae JoongAng Ilbo [jbiz91@joongang.co.kr]


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