As the Korean economy had to deal with a year-long slump due to the pandemic, it was necessary for the government to focus some of its attention on repairing the damage and restoring confidence, in addition to carrying out industrial restructuring and working in the “post-corona economy”.
In 2020, a total of USD 262 billion (about 12.8% of the country’s GDP) was approved by the government for financial support of small businesses and household assistance programs, including the fourth additional budget increase approved in December 2020. Although it is not expected that in 2021 economic growth accelerates rapidly (labor markets will remain weak), the latest data shows that the economy will do relatively well.
The government therefore strives for industrial innovation, on the one hand, through the country’s economic strategy, the so-called New Deal, which includes two main policies – the Digital New Deal and the Green New Deal – and a general policy to strengthen the employment and social safety net, the so-called Stronger Safety Net. Around USD 18 billion is earmarked for its implementation in 2021. The government policy further includes two industrial and two innovation strategies – “DNA” (Data, Network, AI) and “BIG3” (Chips, Biohealth, Future Cars). Likewise, the government strives for innovations that will ensure job security.
Post-COVID-19 opportunities for foreign exporters
The commissioning of the world’s first 5G wireless network before the outbreak of the pandemic can be considered one of the main reasons for the success in the fight against covid-19. In the framework of internal affairs, modern means of tracing contacts were massively used (for example, location data of operators, city cameras, credit card records, etc.). Another integral part of the success was the rapid research and development of test kits, ventilators and protective equipment.
According to allcountrylist, the Republic of Korea is one of the world’s most important car manufacturers. Recently, there has been an increasing focus on the production of alternative drive vehicles (EVs, hybrid cars and cars with H2 drive). The share of EVs in total car sales in Korea was 3.16% last year, which is more than 32 thousand cars. By 2030, the share of alternative drive vehicles should reach 30% of the Korean vehicle fleet.
Great emphasis is placed on the development and production of vehicles with H2 drive. In 2020, 11,000 of these vehicles were produced in Korea, with the assumption that 81,000 cars powered by H2 fuel cells will be produced by 2030. To achieve these goals, it is necessary to build a sufficiently developed network of H2 filling stations.
Transport industry and infrastructure
The New Deal mentioned at the beginning of this chapter highlights 10 key projects that should serve as the building blocks of the upcoming changes. These include, among other things, “Smart Grid Cities” projects – support for renewable sources and their connection to smart grids ($3.252 billion). The Digital Twin project – involving the development of digital replicas of existing or intended infrastructural communications (roads, railways, metro), dams and ports used to model hypothetical situations that may arise in the future. This will lay the foundation for new technologically advanced industries, such as autonomously driven vehicles or the development of drones.
The fastest growing industry on the Korean peninsula is without a doubt the manufacturing of semiconductors followed by the production of chips for the field of communication technology.
The growing demand for EVs is causing a sharp increase in the development of semiconductor technologies, including application processors. The global shortage of automotive semiconductors has even forced some of the world’s automakers to stop part of their production (Tesla, Hyundai Motor). Therefore, the Korean government intends to invest 175 million USD in the development of system semiconductors for “future cars” by 2022. The government will also actively consider “bold” programs to support research and development centers, including the expansion of foundries to produce castings for automotive semiconductors.
The joint share of the three Korean companies LG Energy Solution, Samsung SDI and SK Innovation in the world market for batteries for electric cars reached 34.7% last year. These three Korean companies are also investing massively in the construction of plants for the production of car batteries abroad (USA, Europe – Hungary, Slovakia, Poland, etc.).
In this context, the participation of Czech companies and the state support provided to them is desirable for the possible Korean participation in the construction of the “Gigafactory” for lithium batteries for electric cars in northern Bohemia.
Currently in Korea, around 40% of the state’s energy comes from coal-fired power plants. Although four coal-fired power plants have been shut down in recent years, with another six slated to shut down by 2022 and another twenty by 2034, Korea is the world’s seventh largest producer of carbon emissions. For this reason, Korea will face a major challenge in the coming years in transitioning from fossil fuels to renewable energy sources. In September last year, Korea pledged to reduce its carbon emissions to zero by 2050 at the latest, when less than 5% of the nation’s energy should come from coal-fired power plants.
To meet this goal, Korea is starting to build hydrogen fuel cell power plants. The first such power plant with an output of 8,000 MWh el. energy, which is enough electricity to power almost 2,200 households with a monthly consumption of 300 kWh, was launched in January this year.
As a form of cooperation between the Czech Republic and the Czech Republic, the implementation of small modular reactors of the SMART type into energy networks as well as scientific and research cooperation in the areas of “fundamental research, applied research relating to nuclear and new sources of energy” is offered.
Under the Digital New Deal, Korea wants to strengthen the country’s digital capacity based on its competitive advantage in information and communication technology (ICT), thereby promoting innovation and dynamism throughout the economy.
The Korean government is planning to build an extensive ICT infrastructure including so-called DAM (Data Asset Management) serving as the foundation of the digital economy. This should lead to the promotion of an economy based on data, including its collection, standardization, processing and combining. Ultimately, this will help secure a competitive advantage for the country by creating new industries and accelerating the digital transition of key industries. There will be the creation of Smart GovernmentSmart Cities fully using 5G networks (a 6G network study is also created) and AI. The possibility of digitizing teaching is represented by educational platforms. The intention is to train up to 100,000 AI/SW experts.
Water management and waste industry
The restrictions and limitations accompanying the covid-19 pandemic are supporting the increase in waste in a negative sense. Whether it is waste based on “social distancing” – e.g. transparent plastic partitions and screens (only during the Korean school entrance exams, 500,000 plastic partitions weighing 570 tons were installed, which would fill 18 football fields with their area), face masks (of which billion pieces were produced last year in Korea alone) or polystyrene foam used as packaging material for transporting food.
In all the cases mentioned, this is a very technologically demanding method of recycling, because the substances excreted during the processing of this waste are highly hazardous to health (dioxins, HBCD-flame retardant).
With the rise of electric cars, one big issue is what to do with batteries after they have outlived their usefulness in the vehicle. One ambitious idea is to use them in energy storage systems (ESS), which store energy from sources such as solar panels or wind turbines for later consumption. The state-run Korea Energy Economics Institute predicts that more than 80,000 EV batteries will be retired by 2029.
Entertainment and leisure
Gaming is an economically and socially important sector in South Korea. It is a creative industry combining technological innovations in AI, virtual and augmented reality, 5G, streaming and data transmission. The Korean game market is growing rapidly and is among the five largest in the world with the presence of global companies operating in the region. The boom is particularly experienced in the field of mobile games (worldwide the fourth largest market in this subsector). Here, the Czech Republic has a very strong position and successful developers. And this is an opportunity for Czech companies to reach out to Korean partners.
Here, it is necessary to focus especially on news in 5G technologies and the introduction of new games that work in 5G.
Healthcare and pharmaceutical industry
Korea’s medical supplies market has an annual turnover of US$6.69 billion with an annual growth rate of around 8.1%. In addition to anti-covid-19 resources (test kits, protective equipment), the Republic of Korea exported USD billion worth of technology and equipment last year. At the same time, Korea imports medical technology and medical equipment worth more than billion USD annually. These are mainly soft contact lenses, CT and MRI systems, knee prostheses, disposable dialyzers, etc.
Aesthetic and rehabilitation medicine is experiencing great development.
Agricultural and food industry
With the outbreak of the covid-19 pandemic, interest in nutritional/dietary supplements (not only for immunity, but also for eyes, hair, skin and bones) has spread to various industries. The number of available types of health supplements is an incredible 26,342. The previously most common probiotics and red ginseng are now being supplanted by new supplements, including collagen, hyaluronic acid and multivitamins. The market for nutrition and dietary supplements is expected to grow from the current 4.45 billion USD to 2billion USD in 2030.
Deliveries of ready meals (Home meal replacement HMR) within the home office also increased.
Embassy of the Czech Republic in Seoul
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