South Korea vowed full commitment to revive the innovation drive in the manufacturing sector, with a long-term vision to realign industries to more value-added and future-oriented activities.
President Moon Jae-in announced the state initiative, dubbed the “Manufacturing Renaissance Vision,” on Wednesday at an event held at the Smart Manufacturing Innovation Center in Ansan, Gyeonggi Province.
“Manufacturing resurgence must lead to economic resurgence,” Moon said. The government would push through the new initiative with an aim to become one of the world’s top four manufacturing powers by 2030 and to achieve gross national income per capita of $40,000, he added.
The latest strategy is a follow-up to the set of government measures to revive the manufacturing sector announced late last year. If the previous reports were short-term action plans defined by different segments, the latest is a long-term vision to drive innovation across the country’s manufacturing landscape.
It comes at a time when Asia’s fourth-largest economy is quickly losing steam. Korea’s gross domestic product in the January-March period unexpectedly shrunk 0.4 percent from the previous quarter, its worst performance in a decade. Exports, its main driver of growth, are poised to slip for the seventh straight month amid rising global trade tensions and a sharp downturn in the chip industry, Korea’s main export item that makes up about a quarter of its total shipments.
“We must save our traditionally strong fields,” Moon said. “There is no industry that is no longer needed. They just need to be innovated.”
The renewed focus on manufacturing is a growing trend around the world. Inspired by Germany’s Industrie 4.0 initiative, China released its own Made in China 2025 campaign in 2015. Last year, the United States outlined plans to upgrade its manufacturing sector in its Strategy for American Leadership in Advanced Manufacturing.
KOREA’S MANUFACTURING AMBITIONS
Under the new roadmap, Korea aims to lift the manufacturing value-added ratio to 30 percent from the current 25 percent. It is also seeking to bump up the percentage of new growth sectors, such as future mobility and biohealth, in the country’s industrial portfolio to 30 percent from 16 percent.
The government pledged to invest a combined 8.4 trillion won ($7.19 billion) in the three focus areas designated by the state – non-memory chips, hydrogen fuel-cell vehicles and bio healthcare – through 2030 to lend support to domestic industry leaders, many of which who have also set aggressive investment targets by the same year.
Samsung Electronics, the world’s largest memory chip maker, has stated it would spend 133 trillion won to strengthen its non-memory chip business by 2030. Korea’s largest automaker Hyundai Motor Group vowed to invest 7.6 trillion won in hydrogen technology, with an aim to churn out 500,000 units of the zero-emission vehicles annually. Celltrion, the country’s leading biosimilar manufacturer, also announced plans to invest 40 trillion won in the bio healthcare sector.
Moon said another 1 trillion won would go into basic materials, parts, and equipment sectors each annually in efforts to strengthen the foundations of manufacturing.
To drive innovation in assembly lines, the government vowed to up the number of smart factories to 30,000 by 2022 and create 20 smart industrial zones by 2030. The number of smart factories in the country today stands at 7,903, accounting for just 11.8 percent of all domestic manufacturing sites. Efforts to create fully integrated and automated plants would be taken a notch higher with the artificial intelligence technology, as the government intends to introduce 2,000 AI-powered factories by 2030.
A state fund to assist companies in their industrial restructuring would be expanded by fivefold to 5 trillion won, with Seoul to encourage the private sector to raise mega funds for the same purpose.
The state also plans to expand its tax relief to private companies that make investments in this endeavor. The cash reserves of the country’s top 10 conglomerates are said to reach 248 trillion won, with the number growing every year as businesses refrain from investing in the face of an uncertain future. With the planned tax benefits, the government intends to encourage more companies to spend on research and development and new facilities that would help speed up their structural reorganization.
By Park Yong-beom and Kim Hyo-jin
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]