Once again, Samsung and Korea government together are taking the role of an icebreaker to move and navigate through ice-covered software industry.
Only this time, the ship is bigger and more prepared than ever before. Entering software business, regardless of a company’s size, has been a journey to the Arctic Ocean. Without a strengthened hull, ice-clearing shape, and the power to push through the thick ice, the effort has been nothing but cracking ice with couple of eggs in hands. The biggest obstacle seems to be the cost war against global companies with a name value. The president of Korea Software Enterprise Association Lee Jeong-geun said, “Only Korean software products are as competitive as the ones from Oracle and IBM, yet the companies at home have been surviving in the market by lowering their costs in the competition. This must be put to end in order for the industry to grow. Now is the time to make sure that our software service earns what it deserves.” This aspiration, however, needs the right hull to be pulled through since China is rapidly growing in global scale. China’s biggest strength has always been the low cost, so another cost competition may be inevitable for Korean software companies.
China Today
ICT industry market in China is shitting from hardware oriented to software oriented services. Last year, Xi Jinping the general secretary of the communist party of China urged, “We must elevate harmonious industrialization in our own way where IT applied areas will converge with industrialization, and the urbanization tunes with modernizing agriculture.” Only after a year, the size of the IT market in China has grown by 8.9 percent. Today, many predict that their growth will exceed Japan in no time. Their service platform industry that includes cloud, mobile, SNS, and big data service has grown its size drastically (20 percent) in a year. Big firms of China are speeding up the globalization as well. The corporations like Huawei, Lenovo, ZTE, TCL have safely landed in top 10 global market. Everything from digital television to TFT-LCD are penetrating the global market as the top-tier products. With the government’s undying support, China is seeking to localize the core parts and row materials so that they will have competitive finished products in the end. This will help expanding their business in globe, and China will continue to lead the global market with their low cost policy.
In the scope of software industry, China has been growing its industry by 20 percent every year since 2006. As of 2011, the volume of software manufacturing was 170 million dollars. This is only three percent of the entire industry of China. What shows rapid growth is in is IT service area in software industry. Annually, the market is growing by 31 percent.
Every Clouds has a Silver Lining
In the midst of witnessing China’s fast growth, how the government and Samsung will rise up a creation economy and establish a strong venture ecosystem for the software industry? Samsung Group recently announced that beginning this year it will place vast investments to increase the manpower of the software industry. The estimation cost to back this master plan is presumed to be 151 million US dollars. This budget will educate 50,000 software professionals and recruit 10,000 software workforces in five years. The government, in the meantime, seeks to announce an innovative strategy for the growth of the software industry in June. The Ministry of Science, ICT and Future Planning will organize a software cluster, vitalize start-up software companies, and strengthen education curriculum from elementary to secondary schools. Choi Mun-kee, Minister of Science, ICT and Future Planning, comes from software system managing background with another long term career in ETRI, the Electronics and Telecommunications Research Institution. “We must build a software-oriented tower that accommodates strong policies,” He continued, “A separate research center for software policy is also in urgent needs for software industries.” Yoon Jong-lok, Vice Minister II of Science, ICT and Future Planning said during the briefing on May 1, “In order to secure the new growth momentum of software industry, we are making strategies. We strongly believe that the software industry will hull our future growth of a company as a whole.” Many related parties are expecting a synergy effect from Samsung and different sectors of government. Another silver lining will show at 2013 INT’L SOFT CHINA. Since this is the very first year the grand exhibition is allowing Korean software pavilion, collaboration between the two nations will be addressed at the event. KOTRA is scheduled to sign Memorandum of Understanding with China Software Capital and China Software Industry Association. KOTRA has also organized Korea China ICT Ministerial Meetings and a Digitalization Forum. Twenty software companies are selected to exhibit in the exhibition for the first time in its seventeen year history. KOTRA will create a business opportunities between the nation’s top companies and China’s bests through networking and hall meetings. The global companies of China- Huawei, Lenovo, ZTE- have signed MoU with KOTRA last year, so they are to visit Korea Pavilion during the exhibition. By organizing the ministerial meetings and signing significant MoU, KOTRA seeks to build partnership with China at this visit. INT’L SOFT CHINA is the largest software annual event in China where each of 15 provinces runs its own pavilions that is composed of 30-50 local companies. Until this year, only the major global corporations like Microsoft had a privilege to participate as the exhibitors. KOTRA and KOSEA believe that the participation to this exhibition means an advantage to find partners in China, and a golden gate for small and medium sized software companies in Korea. Harvesting Months are getting closer. The Government, Samsung, and small and medium sized companies are giving their all to reap what they sow in the near future. The icy ocean will take awhile to melt, but with the new strategies and policies the software industry will be able to navigate through the ice covered market.