When it comes to internationalization, founders in Germany usually look westwards. Wrongly so: Asia, and as one great example, South Korea, has a lot to offer them.
Mabel Fu, Program Director for our Market Discovery program, and Phong Dao, CEO & Co-Founder of iVE.ONE, share insights and learnings from their experience in South Korea in a contribution to Munich Startup. Here are the key takeaways:
With a gross domestic product of US$1.65 trillion (2019), the country is currently one of the richest and most modern countries in the world. There is a domestic market of 50 million affluent, tech-savvy Koreans, and Korean companies are extremely open-minded about new digital offers. About one in ten individuals already use 5G on their mobile phones, and the broadband penetration rate is highest in the world (97%).
South Korea’s government wants to position itself as a pioneer of digitalization and is therefore investing US$12 billion in its startup scene and in new online services by 2022. On the venture capital front, there is a growth in VC investments in South Korea, and the government is encouraging large local companies like Hyundai, LG, Samsung, and the Shinhan Financial Group to set up investment arms. It’s no wonder that South Korea has topped Bloomberg’s Innovation Index seven out of nine times!
There are four digital fields in South Korea that German startups should pay attention to:
Artificial Intelligence (AI):
South Korea boasts an innovative AI hub to the south of Seoul, the Pangyo Techno Valley, where applications related to AI and machine learning are being developed. Gwangju Metropolitan City plans to invest over US$330 million in the next five years to create an AI-based scientific technology startup complex; an industry – university collaboration centre, as well as an AI-based self-driving car centre, to attract startups that focus on smart systems and services.
South Korea has the highest robot density per capita worldwide, with a booming robotics industry forming the core of the country’s Fourth Industrial Revolution vision. Around 320,000 robots support a wide variety of manufacturing and service processes in South Korea, and this number is expected to double by 2023. To this end, the Intelligent Robot Development and Supply Promotion Act promotes the development of smart machines, and workers are already being trained in the use of robots. The country sees robotics as a solution to social issues, such as labor shortages and in healthcare.
IoT & Smart City:
In 2020, an estimated US$25.7 billion flowed into the Internet of Things (IoT) and Smart City investments in South Korea. Sensor technology and IoT solutions made in Germany have a very good reputation in South Korea, and is one of the strongest sectors for German startups to prove themselves in practice.
Smart Manufacturing & Smart Factory:
According to the International Federation of Robotics, South Korea is the most automated country globally. By 2022, around 30,000 smart factories are to be built, of which about a quarter have already been realized. Startups that develop technologies for smart manufacturing are highly welcome and can receive corresponding financial support from government incentives.
Read the full article in German!
Want more insights on the South Korean market? Check out our snapshot report for comprehensive insights, top tips, and opportunities to expand your business to South Korea.