SK Group’s ‘Deep Change’: Employing IT in Agro-Livestock Industry
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SK Group’s ‘Deep Change’: Employing IT in Agro-Livestock Industry
Group tries to acquire stake in China’s third-largest beef producing and processing company Kerchin Cattle Industry to foster the ‘senary’ industry

26(Sun), Feb, 2017

SK Group Chairman Chey Tae-won deliver a speech at a ceremony to kick off the 2017 business year at the group’s headquarters in Seoul. (Photo: SK Group)

SK Group’s move to acquire a stake in a Chinese livestock enterprise is consistent with the group’s strategy to foster new growth engines by combining advanced ICT with the agro-livestock industry sector.

The agro-livestock industry, which had been deemed as a sunset industry, has become the subject of keen attention of late. A global population is boosting demand for grain ever higher. 

In particular, China is seeing the agro-livestock industry growth fast, corresponding with a rise in China’s middle class. 

Reuters reported that Chinese livestock companies saw sales surge an annual average of 13 percent over the past five years. 

To improve the quality of livestock and enhance productivity, agro-livestock industry has made a move towards convergence with diverse ICT capabilities

The move involves upgrading the agro-livestock industry into a “senary industry.” A senary industry is a combination of the first (raising, catching and growing food resources), second (processing) and third sectors (sales and other service) in rural communities to create high added-value.

In the livestock industry, drones are used to gather data while grazing livestock, and sensors are attached to adjust feed amounts. The industry could strengthen quality management by employing IoT technologies in course of butchering.

A representative segment in focus is the “smart farm” market. Smart farms are farms that utilize advanced technologies. The global marketing survey and consulting company Markets and Markets forecast that the size of the smart farm market will to jump from $9 billion (about 10 trillion won) in 2016 to $18.4 billion by 2022, with an annual average growth rate of 13.8 percent. 

Countries are scrambling to foster related industries with the dual purpose of not only securing food security, but also securing such new markets as smart farms. China is the most aggressive country among them. 

Contrary to the start reality of the Korean agro-livestock industry in which agro-livestock farmers oppose such businesses, their Chinese counterparts are giving it a try by employing advanced ICT technologies, business analysts said. China’s IT juggernaut Alibaba and Tencent have secured data in the agro-livestock industry by employing censor technologies, KOTRA’s branch office in Beijing reported. SK Group is believed to choose China as its scheme to explore the sensory industry due to the country’s favorable business conditions, they said. Korea is making its move. 

SK group plans to expand investments into the agro-livestock industry. The group aims at fostering new businesses while making attempts to embrace advanced technologies. For instance, the cultivating and reaping time of fruits can be determined by attaching censors. Automation via fruit-picking machinery can be done to enhance efficiency. 

SK Group is now contacting startups and several companies to secure smart farm and related technologies, business sources said. Chance are good that SK Group will foster the agro-livestock industry by connecting SK Innovation, which specializes in energy and chemical businesses, with SK Telecom, which specializes in telecommunications field, and other mainstay businesses. 

SK Innovation might expand its business portfolio to include chemical products related to the agro-livestock industry. 

Global chemicals players are venturing to tap the agro-livestock industry.

SK Telecom could widen is business portfolio to ICT systems for smart farms. The telecom service provider has already been operating the smart farm “Durae Village Farm” in cooperation with Sejong City. 

SK Hynix is also involved. The company will likely seek chip buyers in a bid to expand into a variety of sensors which arre necessary for the operation of smart farms. 

SK Group’s move to tap the sensary industry is in the line with Group Chairman Chey Tae-won’s determination to undergo “deep change” in regards to innovation. Last year, Chey repeatedly called for the exploration of new growth engines, saying if a company doesn’t change, it would die. In particular, citing the buzzwords “deep change,” he urged his executives to aggressively enter brand-new business arenas.

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