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Korea needs to draw long-term growth plan for startups

South Korea growth plan for startups news - Retail in Asia

Korea has leaped into being one of Asia’s leading economic powerhouses in less than a century after the post-war devastation back in the early 1950s.

Many attribute the rapid growth to the nation’s tough working culture — represented by an obsession to generate short-term, outstanding outcomes mainly in the business circle.

This has brought about such homegrown hardware titans as Samsung and LG whose history falls short of their overseas counterparts, but have become top-tier players.

The hardware-driven growth, however, is still holding back the development of the local software industry, with the government putting little attention on the non-manufacturing yet crucial growth area.

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“Not a single Korean software company has achieved global success, compared with the hardware or manufacturing industry players,” Tiger Company CEO Kim Beom-jin said in an interview Sunday. The software startup — established in 2011 — is an enterprise-level social networking system provider here.

He said the nation’s software market is not huge enough to grow into a sizable shape due to the small market size and weak infrastructure, so the government needs to implement specific measures for its long-term growth both in quality and quantity. The software market in the United States and China is 20 to 30 times bigger than that of Korea, he said.

“It is also tough for us to tap directly into overseas markets, as we are no match for industry leaders there in terms of factors such as capital, workforce and marketing,” he said.

Kim urged the government to support local software startups in particularly overseas networking and marketing activities.

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“Small startups with weak capital cannot have enough chances to contact overseas clients and promote products by participating in global exhibitions,” the chief executive said.

The government has in recent years pushed for the development of the local software industry. For example, the Ministry of Science, ICT and Future Planning unveiled a plan last year to name and support 20 software-oriented universities by 2019.

The move comes amid growing calls that the country should make more effort in software education to build an infrastructure for its long-term growth.

This reflects that global information and communication giants such as Google and Facebook generate billions of dollars in profit with their software infrastructure. But even if the global tech paradigm has shifted into the software sector, the government has made little effort to catch up with the trend.

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“The small software market size is also blocking the government from making enough investments in software industry players,” he said. “Most state-run bodies have invested mainly in hardware and online to offline industry players here, paying little attention to their software counterparts.”

“Local venture firms or small- and medium-sized firms can receive state-run research and development funding projects for as long as three years,” he said. “But the government needs to draw up concrete funding policies from a longer-term perspective, from product development to global expansion.”

(Source: The Korea Times)

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