By James Santagata
Principal Consultant, Silicon Edge
I've had in interest in Korea for quite a long time both in cultural and business terms so you can imagine how quickly I was drawn to the article entitled, "Can Korea’s new culture of business creativity rival Silicon Valley?".
It's fascinating to me for several reasons.
First, I read a book on this subject back around 1990 entitled, "Is Korea the Next Japan?: Understanding the Structure, Strategy and Tactics of America's Next Competition" by T.W. Kang.
Now, T.W., Kang while not a famous author by any stretch of the imagination, is extremely insightful in his writing and should be famous as he writes from a unique perspective -- a Korean raised in Japan and educated in the US (BSEE MIT / MBA Harvard). He is trilingual and as an "outsider" to all three cultures slices and dices these cultures and explains them like a boss.
Apparently T.W. Kang is now Managing Director of Global Synergy Associates, a management consulting firm based in Tokyo and prior to this he was on the advisory board of advisors of a number of high tech ventures including GEM Services, Inc., Synaptics, Inc, and SiliconWave, Inc. and was a General Manager for Intel Japan.
Second, around 1995, when I was working at Applied Materials (AMAT), the Japanese were still dominating chip production, primarily memory chips, and yet the Koreans were coming on fast. Not only were they pushing their R&D forward extremely aggressively, but they began mimicking and borrowing Japanese chip production techniques and technologies. For instance, on the semiconductor fabrication tools that Japanese firms would buy from Applied Materials they often had a certain configuration, in both the components they chose such as the Mass Flow Controllers (MFCs) but also in the gas panel designs -- and this "signature" look was across Japanese chip makers. And yet, by 1996, if you took a Japanese process engineer onto the floor of AMAT's manufacturing facility and showed them the gas panel of a Korean chip maker (covering up any signage or badges), the Japanese process engineer would broadly smile and say, "It's for a Japanese chip maker!". If you then told them the truth, it was for a Korean chip maker, they be, "What?! Really?!". How do I know this is true? Because I did it and experienced it with a co-worker on several ocassions.
What was happening even in 1995 and 1996 is that Koreans were going in all the way to own these component markets. And even when the 1997 Asian Financial Crisis hit, they keep right on investing in component development and production tools. They also, along with Japan invested very heavily in telecom infra for their country giving them an early lead in pervasive, persistent high-bandwidth communication network all for a pittance.
Third, after the dot com / dot bomb crash, the Koreans continued building and investing. But unlike the Japanese, how in modern times, shy away from getting into a scrap or lawsuit, the Koreans almost relish it. When someone like Steve Jobs / Apple sues Samsung, they are scrappy and come out fighting. And then they use other leverage they have, like the Samsung components that Apple relies for its iPhone. These Korean firms also took advantage of the labor immobility and horrible talent management policies found in Japan, such as the refusal to hire from direct competitors or to hire a mid-career executive or old engineer. Korea took them all and gave them a home. And these Japanese engineers produced.
Can Korea’s new culture of business creativity rival Silicon Valley?
By Mario Gamper, VentureVillage
Published on December 24, 2013 4:00 PM
“This is the best time ever to start your company in Korea,” said Dreamcamp Manager Ryu Hahn. The coworking space and incubator is funded with more than $450m by 20 Korean banks who have formed the “Banks Foundation for Young Entrepreneurs”. Offering a wide range of support, from pitch clinics to funding, Dreamcamp is just one example of the structures for new business ideas that popped up in the last couple of years.
“Korea is now the biggest startup in the world,” smiles Richard Min, cofounder of the SeoulSpace incubator and brand new Fashion Tech (FT) Accelerator. “60 per cent of all venture capital here is government-backed. In the US it’s one per cent,” said Min.
This creates a unique startup ecosystem: “Korea has always been a top-down economy. The government has now decided to merge it with bottom-up creativity. We’re creating a completely new business culture, one that’s not even seen in Silicon Valley, or anywhere else,” added Min.
In 2012 the 10 biggest conglomerates were responsible for more than 80 per cent of Korea’s GDP, more than ever before. For decades the Chaebol – a form of business conglomerate in South Korea – throttled local entrepreneurship. In its quest to create new jobs, the Korean government is finally taking the side of SMEs. And it’s telling them to take bigger risks in hopes this will lead them to bigger markets.
“Before this year, almost all support was about creating a new startup. But this year they really pushed startups to go abroad,” Daniel Cho, cofounder of Step, a journaling app that used government funds to send a small team to the Plug & Play accelerator in Sunnyvale.
“Korea used to be a Galagapos of business creativity,” said Kim. An ecosystem so specific, that ideas and solutions could be successful here, but wouldn’t make it anywhere else. “This has changed.”
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