KT is taking the initiative in converting the Pangyo Techno Valley, the nation’s largest IT industrial complex, into a hub to nurture new industries, including games and Fintech, as well as the Internet of Things (IoT).
“True to the ‘K-Champ’ initiative, KT is stepping on the gas to nurture startups in new IT convergence industries, including Game, Fintech, and IoT,” said Executive Vice President Choi Young-seok of the Corporate Relations Group at KT.
“KT has set aside part of its booth at the World Mobile Congress Shanghai 2015 for publicizing Korean start-up and venture companies KT is now supporting,” said Shin Seung-yong, team leader of the Creative Economy Initiative Unit of the Corporate Relations Group.
KT and the government established the Gyeonggi Center for Creative Economy and Innovation on March 30, housed at the Pangyo Public Support Center, which will play a key role in developing Pangyon into a cradle of ICT convergence industries. The goal is that it will become the Korean version of Tech City, similar to a technology cluster in London, or Silicon Valley of the United States.
“The center offers networking space as well as space for housing 25 select start-up companies and test-bed facilities for testing prototype products and services,” said Senior Executive Vice President Chun In-sung of the Corporate Relations Group at KT.
Shin said the Gyeonggi Center for Creative Economy and Innovation is operated such as way that it takes its cue from success stories of its foreign counterparts. The Pangyo is already a center of many prominent IT companies, including NCsoft, Daum Kakao, Nexon and Hancom.
With the widening of borderless “smart” competition, Korean ICT companies’ strategy to make inroads into global markets has emerged as an essential factor for their survival and corporate growth. A focus on the narrow domestic market may hit a wall to grow, and a company may also be faced with a fierce competition with foreign counterparts in the United States, China and other countries.
But venture companies find it difficult to make inroads into foreign markets on their own. As of January 2015, the number of Korean venture companies has surpassed the 30,000 mark. Venture companies based on creative ideas and R&D activities into advanced technology accounted for 198.7 trillion won in combined sales, taking a 13.9 percent share in gross domestic product. Venture companies chalked up 6.84 billion won in average sales, 2.4 times more than SMEs’ average of 2.84 billion won, while the former employees — an average of 24.7 people — 6.3 times more than SMEs’ average of 3.9 people, serve as a force behind the national economy and a treasure of creating jobs.
What is more important is how venture companies can grow into mid-size superstars by surviving the so-called Death Valley, a period during which venture companies have difficulties such as fundraising in the course of commercializing technologies between three and seven years after developing them. In particular, chances are high that start-up businesses based on technology may fall into the Death Valley due to a dive in net profit five years after their establishment. A system should be in place to salvage prominent companies.
For venture companies, tapping the global market is a significant issue. Figures released by the Small and Medium Business Administration (SMBA) showed that 98 percent of start-up businesses aim at making inroads into foreign markets, which is quite high compared to the average company rate of 2 percent. According to MSIP, 31.2 percent of ICT SMEs who failed to advance to foreign markets cited a lack of manpower in charge of tapping overseas markets and 17 percent said they said a shortage of information on their target markets. There is a need for offering systematic support ranging from expertise manpower networking to the provision of local information to nurture globally-specialized companies with a focus on overseas market exploration.
In an effort to boost the environment of the creative economy, more and more youth have to be filled with creativity and passion for launching businesses. The portion of youth CEOs declined from 32.4 percent in the early 2000s to 11.6 percent in 2014. Korea is currently classified as an innovation-oriented economy, but the rate of start-ups for opportunities vs. that for earning a living in Korea is 0.9:1, which is too low compared to a 16.4-fold in Norway, an 11.1 fold for Sweden, a 2.8-fold in the Untied States, and a 2.6-fold in Japan. This indicated the fact that even though youth seize business opportunities, they tend to be reluctant for fear of failure, they find such difficulties as language barriers, knowhow, and funding problems in entering global markets, and they are also faced with insufficient infrastructure for educating start-up and mentoring.
Innovation centers’ bids, including those in the United States, United Kingdom and China, to nurture start-up and venture businesses have begun to pay off with a number of success stories. To name strengths of innovation centers, differentiated cultivation programs connecting global networks are offered, industry, academia and research circles’ R&D capacity each region has is maximized, and an immersion environment is created through condensed cultivation programs, and a dynamic start-up environment is prevalent through openness and sharing.
Establishment of Platform for Global Advancement
The Gyeonggi Center for Creative Economy and Innovation has established the “G-Alliance” with such global start-up support centers as Catapult, Orange Fab, Wayra and Docomo Innovation Ventures, as well as foreign venture capitals including Formation 8, Storm, and Walden, and such Korean start-up institutions overseas as Born2Global and KIC to extend a helping hand to Korean start-up companies wanting make inroads into foreign markets. The G-Alliance Leaders Forum will be held to evolve into an effective, strong global network by discussing agenda items for each participant’s cooperation and sharing policies on the cooperation of the G-Alliance, the direction of strategies, each region’s successful start-up cultivation practices, and investment knowhow.
It is noteworthy that the Gyeonggi Center for Creative Economy and Innovation’s platform for global advancement may be utilized by not only start-up companies and venture companies in the Gyeonggi-do area, but also counterparts in 16 other creative economy and innovation centers across the nation to become Korea’s representative gateway to enter foreign markets.
The Gyeonggi Center for Creative Economy and Innovation is creating a consultative body with other counterparts and conglomerates. For instance, a “DemoDay” will be held to publicize products and services of 40 select teams and induce investments from foreign venture capital companies.
Prominent SMEs will be given chances to participate in such mega-exhibitions and trade fairs as MWC, Communic Asia and CES. A DemoDAy will be held abroad for the top five ventures. The Gyeonggi Center for Creative Economy and Innovation is outfitted with such regular support systems as a teleconference system, and the center offers diverse global advancement programs, including an exchange program with G-Alliance participants, and it plays the part of coordinator for matching foreign start-up support institutions and Korean creative economy and innovation centers and SMEs suited to the former’s requests.
Maximization of ICT Capacity Connectivity
In an effort to concentrate regional prominent capacity with a focus on Pangyo, the Gyeonggi Center for Creative Economy and Innovation is seeking to boost the ecosystem for launching businesses related to game, Fintech and IoT by connecting other creative economy and innovation hubs as Pangyo SW Convergence Cluster, Gyeonggi Content Agency, and the Global Game Hub Center in the region. The center plans to run support programs ranging from commercialization of ideas to mentoring, market verification, exploration of marketing routes and overseas advancement.
The center plans to operate an optimized program to support the game industry in Pangyo, a mecca of the Korean game industry, in which eight of the top 10 games companies are located.
Test-bed for Creating New Markets for Next-Generation Communications, FinTech, and IoT
The Gyeonggi Center for Creative Economy and Innovation is building up diverse test-beds to help start-up companies test their own services.
KT plans to establish a “Next-Generation Telecommunications Innovation Lab” to provide technology at the center for supporting technology support to SMEs developing telecom systems in cooperation with Samsung Electronics and Ericsson with which KT is collaborating. In an effort to make Pangyo a center of Korea’s next-generation telecom technology innovation, KT plans to establish the next-generation telecommunications test-bed in the Pangyo area in which support can be offered for the development of proprietary technologies by allowing such companies as 5G cellphones, relay bases and telecom system SME makers to test-operate pilot services. The upcoming test-bed is designed to explore start-up businesses specializing in core application services in the next-generation telecom field.
The center provides support to prospective Fintech start-up businesses and venture companies by establishing a Fintech support center and combining commercial banks, credit card companies and other financial institutions’ capacity and resources. The Fintech Support Center offers such support as business mentoring and testing, while the government relaxes administrative red tape and regulatory reform with connection to financial companies.
KT plans to implement an IoT-based safety and health service project to monitor children’s safety and health in cooperation with the Gyeongi-do provincial government. The pilot project will serve as an opportunity for venture companies to participate in IoT businesses.
Comprehensive Support Ranging from Start-up to Market Exploration
Starting with the start-up stage, the center sponsors start-up contests, provides accommodation space for start-up companies and “Heckerthons” to help prospective start-up businessmen develop ideas into prototype products on their own. Such support programs as education for managers, specific mentoring, support for developing prototype products, and exploration of marketing routes are to be in place according to each stage.
“Creative funds” will be raised to nurture start-up and venture businesses, particularly for fostering SMEs related to game Fintech, IoT. KT extends a helping hand to Korean companies attract investments in cooperation with foreign investment funds KT has already invested and suggest Korean prominent companies to foreign funding companies.
‘K-Champs’— Korea's Hidden Champions
KT stresses a need to beef up a Korean-style creative economy model designed to make the most of the strengths of the Korean economy in which conglomerates account for 60 percent of the nation’s total exports and 20 percent of employment, quite higher than counterparts in other countries. The goal of the model is to nurture “K-Champs,” the Korean version of hidden champions in Germany by combining conglomerates’ assets with capacity and venture companies’ creativity.
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