Korea Awakens, Reacts…and Accelerates (2008)

Sense of urgency quickly on the rise over export crisis
Robots could well become a huge part of the solution to Korea’s current export woes? And, it seems that Korea’s government agrees.

If you are an export-oriented economy like Korea where exports account for about 50 percent of the country’s GDP, what happens when exports take a big hit, as in 2015 when exports tumbled to a six-year low?

Korea’s major export partners: China (25 percent of total exports), ASEAN (14 percent), the United States (10 percent) and the European Union (9 percent). According to Trading Economics: “The country is the world’s largest exporter to China — and as such among the most exposed to the renminbi’s depreciation. It is also facing increasing competition from Chinese companies in major manufacturing industries.”

With a situation reminiscent of the financial crisis of 1997, as some fear, seemingly revving up again for a return visit, Korea is moving fast to change direction.

Korea’s President Moon Jae-in, has vowed to embark on structural reforms to head off any risk of crisis as economic pressures mount on Seoul.

The Financial Times succinctly what is facing Korea: “A challenging task of reviving faltering economic growth as exports continue to slow amid cooling demand from China, while domestic spending has been held back by high household debt.”

That’s a big job!
“We are talking about a crisis now,” said former finance minister, Yoo Il-ho, “because it is time to take some pre-emptive measures such as passing the bills on economic revitalization and structural reforms.” 

“South Korea’s expertise in screen technology, semiconductors, sensors, and auto manufacturing gives it an edge, says Lee Jeong Yeob, a senior research engineer at Hyundai Rotem, a defense company that’s part of Hyundai Motor Group. “We have the fundamental technologies, which we should use to commercialize robots.”

Colin Angle, CEO and co-founder of Bedford (Mass.)-based iRobot, agrees with Lee’s assessment of Korea’s robotics expertise. Angle believes “Korea ranks just behind the U.S. in robotic innovation.” Yet he adds that will mean little if companies can’t make commercially viable robots that global consumers want to buy. “Robots take huge amounts of capital,” he says.

Intensive capital investment will be necessary from the government  to reach Korea’s 2018 goals of 600 domestic robot companies employing 34,000 workers.

The capital is there. The competition is formidable from Japan and Germany as well as a burgeoning robot industry in China.

The bottom line from a Bloomberg analysis sizes up the challenge ahead: “Korea is spending $945 million to boost its robotics industry, which has a low profile internationally.”

Korea has faced such challenges before and succeeded grandly.