KAIST

Doosan Group Vice Chairman Lee Hyun Soon, left, and KAIST President Shin Sung Chul

SEOUL/DAEJEON, South Korea — Attention is shifting in South Korea toward emerging technologies of the fourth industrial revolution, such as smart tech, artificial intelligence and big data, as a means of creating business opportunities to overcome stagnant growth in the manufacturing industry.

Last year, South Korea’s economic growth rate stood at 3.1 percent, hitting the 3 percent level for the first time in three years. However, the unemployment rate for young people aged 20 to 29 is 9.9 percent, the highest figure since the early 2000s.

Because high value-added industrial development is necessary to resolve the employment crisis facing the nation’s youth, South Korean President Moon Jae In is placing more emphasis on economic growth via technological innovation.

“As labor costs have risen, productivity hasn’t been able to keep up with the pace,” Doosan Group Vice Chairman Lee Hyun Soon said during a recent interview with The Japan News at the Doosan Tower in Seoul. “Competitiveness in the South Korean manufacturing sector is weaker than before,” he said. Lee was responsible for engine development at Hyundai Motor Co. for many years.

According to Lee, South Korea’s major companies were no match for the technological prowess of the United States, Japan and Germany in the 1990s. However, the companies were able to achieve growth by adopting a “fast follower” strategy — an approach under which they quickly absorbed new products or services introduced in those countries.

However, because the technological gap between South Korean companies and leading overseas’ firms has narrowed since the 2000s, the conventional strategy is no longer effective. Lee said improving productivity is an urgent task because South Korean companies need to spend a massive amount of money on research and development.

Doosan Group, which is the parent company of Doosan Heavy Industries and Construction, has recently boosted investments in fourth industrial revolution-related technologies. The group began operating a “smart factory,” producing smartphone parts using automated manufacturing procedures, which improved productivity by 37 percent. A Doosan Group subsidiary in charge of infrastructure development connected telecommunication devices to heavy equipment to enhance operational efficiency.

As the Moon administration considers economic growth via technological innovation to be one of the four main pillars of its economic policies, the South Korean government in October last year set up a new fourth industrial revolution committee, which comes under the direct control of the president.

“We need to set forth a strategy that strengthens competitiveness so we can overcome various challenges at home and abroad,” a senior government official said.

When it comes to new technologies, education also plays a key role.

“We’ll nurture highly skilled human resources, which the nation considers vital in the fourth industrial revolution era, and contribute to our country through necessary research and development,” stressed Korea Advanced Institute of Science and Technology (KAIST) President Shin Sung Chul.

In particular, Shin said it is very important for South Korea’s future to foster so-called “hidden stars,” small and midsize enterprises that will form the technological foundation of the country.

New technologies are expected to bring big changes, not only to simple assembly processes but to a variety of fields, including transportation, packaging and inspection.

Lee estimates that about 3 to 4 million people may lose their jobs in South Korea due to the introduction of new technologies. However, he said an increase in the number of technology experts through reeducation at universities and other entities to address the existing talent shortage could shore up the South Korean economy.

For Japan, fourth industrial revolution-related technologies are also indispensable to overcoming serious labor shortages. Lee said Japan has advanced sensor and manufacturing technologies. “If these [Japanese technologies] are appropriately merged with telecommunication and semiconductor technologies — South Korea’s strength — the two countries could enjoy synergy effects in new fields,” Lee added.