Korea still behind in software power; “The biggest issue is the lack of appreciation for intangible assets imbedded in Korean culture”

2013-05-17 17:23

Korea still behind in software power

State-run program needed to nurture software talent

By Cho Mu-hyun

Korea’s competiveness in the global IT industry has to date been from making durable, high quality hardware. Though many use Samsung Electronics’ Galaxy S3, few would say they’ve ever used a program made here and if they did, with satisfaction. The local industry has been well aware of the problem, even before big-named brands such as Samsung and LG kicked off abroad. But now that the new administration is pushing for a “creative economy,” there have been more visible initiatives for more software.
However, many say there is a fundamental issue that needs resolving. Hiring a bunch of software developers or pouring in money, which many conglomerates have been doing, doesn’t touch the heart of the matter, they say. “The biggest issue is the lack of appreciation for intangible assets imbedded in Korean culture,” said an executive of an enterprise software developer, requesting anonymity. “Piracy is embarrassingly high compared to other mature markets in the Asia Pacific region.”The executive slammed any comparison with piracy levels of neighboring China, or countries in Africa and the Middle East. “It would be wrong to compare us with industrializing nations that have a large land area and population,” he said.

“I mean who hasn’t downloaded a program illegally in Korea?” said a 27-year-old office surnamed Jang in the local finance industry. “I’ve got games, movies and media tools that I’ve pirated, which I guess I know is wrong.”

“But honestly when everyone is doing it, I feel it’s unfair that I’ve got to pay tens, sometimes hundreds of dollars for programs.”

Even within the local market, there are only a few companies worth mentioning that are making profits by only focusing on software, such as AhnLab, an antivirus software maker, with comparatively lower revenue of around 30 billion won compared to hardware-focused counterparts. Kakao, the maker of its namesake mobile messenger, only got into the black starting last year.

Another senior official of a local parts maker suggested more delegations abroad. The Korea Communications Commission, the nation’s telecom regulator, and the Ministry of Trade, Industry and Energy have all took small time developers from small- to mid-sized enterprises (SME) on tours abroad, especially to the U.S., to see the creative models there.

“I think software fundamentally requires more creativity than making good hardware, with the exception of design where it is equally important,” said the official. “Since Korea can’t provide the adequate environment for that to happen, there needs to be investment specifically for IT research centers based abroad.

“We’ve got a population of 50 million, and that is only a lot when we compare it with the size of our country. We’ve got to manage our human talent more efficiently. Make software designers and developers work and live in Silicon Valley. Make them breath and live there, sometimes that’s all the difference it takes,” he added.

Market watchers also say a government-backed education program that is consistently funded is needed to increase awareness of piracy for both organizations and regular consumers. The Korea Software Industry Association and BSA, a software alliance have held regular sessions on the matter, but hardly large enough for a wider recognition of the problem.

A state-run program to nurture talent is also required, said multiple officials. “China and India, for example, have a large amount of highly-educated would-be developers, and strong government support,” said the executive.

Shin Dong-hee, a professor specializing in interaction science at Sungkyunkwan University, said education programs run by governments and companies but focusing on fusing studies with the humanities were needed.

“Software development has long been neglected due to the focus on building hardware and infrastructure,” he said. “Developing software comes from understanding human needs and there is a lack of that kind of direction. Education about software must be done through converging disciplines.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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