創新與經濟發展case study—以韓國為例
09-07, 2014
創新是韓國經濟的關鍵
韓國的商業環境與該地區的其他國家，如新加坡、香港、日本、馬來西亞和泰國都是激烈競爭的世界經濟體相比排名很好。韓國一直連續三年在世界經濟論壇的全球競爭力報告中處于上等分(GCR)。在2008/2009 GCR指數中排名第十三,緊隨新加坡之后(第五),日本(第九),香港特別行政區(第十一),并且處于馬來西亞之前 (第二十一)和泰國第三十四位。美國是最領先的國家(GCR 2008/2009)。自2006年以來,3年以上的變化方面，韓國在該地區表現得最好，在指數上上升了22位。
Source GCR 2008
韓國政府推行的政策和宏觀經濟條件使得這個國家很有競爭力。在包括研發GCR08在內的穩定和創新方面,韓國排名第二，在購買先進技術產品方面第七，并且它的專利是強大的經濟競爭力指標(歐洲工商管理學院GII2)。
創新已經成為韓國經濟的引擎。它是世界上最具創新力的國家之一(波特, GCR 08-09)。
Innovation Is The Key To Koreas Economy Economics Essay
Korea's business environment ranks well compared with other countries in the region - Singapore, Hong Kong, Japan, Malaysia and Thailand all of which are strong competitive world economies. Korea has been in the upper decile of the World Economic forum’s global competitiveness report (GCR) for 3 years running. It is in at (13th) in the 2008/2009 GCR Index, behind Singapore (5th), Japan (9th), Hong Kong SAR (11th), but ahead of Maylasia (21st), and Thailand 34th. The USA is the leading country (GCR 2008/2009). In terms of change over 3 years since 2006, Korea has performed best in the region moving up 22 places in the index.
Source GCR 2008
The policies pursued by the Korean Government and its macroeconomic conditions have made the country very competitive. In terms of stability and innovation including R&D in the GCR08, Korea ranks (2nd) in the purchase of advanced technology products and is (7th) in terms of patents which are strong indicators of a competitive economy (INSEAD GII2).
Innovation has become the engine of Korea’s economy. It is one of the most innovative countries in the world (Porter, GCR 08-09). Using Porter’s national diamond analytical tool, the following summarises the key attributes and detractors of Korea’s national competitive advantage:
Factor Conditions.
A didactic interpretation of Porter’s definition of factor conditions could well be derived from the conditions in Korea. Korea is short of some of the key classic factors of production i.e land, natural resources and readily available labour. Therefore, since the 1960’s, it has set about innovating, investing and specialising to maximise the exploitation of what resources it has or could attract. Porter states that it is not the degree to which a nation is endowed with the factors of production but how they have deployed or acquired. Korea therefore exemplifies this and has become one of the strongest growth economies in the world.#p#分頁標題#e#
Korea is an export led economy and is heavily dependent on imports of raw materials. Its natural resources are few in terms of the ingredients for commercial products except perhaps deep water ports for ship building. The country does have natural resources of coal, tungsten, graphite, molybdenum, lead, and has hydropower potential (CIA fact book). However, their value is limited in commercial terms due to either the difficulty of extraction or poor quality of product and therefore the economic structure is extremely dependent on international trade.
Since 1962 Korea’s economic strategic policy was to transform the country from a backwards agricultural nation into a modern industrial one (Korea Development Institute 2005). A feature of this approach has been successive 5 year plans that Korean Governments have implemented to address its short & medium economic aims. Because the country was dependant on the import of raw materials, such as oil, the major focus has been to drive exports and simultaneously develop import-substitution. This has meant emphasising greater international competitiveness in creating its output including higher productivity which is a slippery concept in the best of times.
The earlier economic plans of the country had an emphasis on moving from agriculture to light industries. Later economic strategy took them into heavy and chemical industries away from light industries as the government wanted to mirror the major nations of the world (Savada and Shaw 1990). Today this has reversed somewhat as the Korean Government has moved away from a heavy industry focus back towards lighter industries creating a knowledge based economy and has become the leading producer of ICT products in the world.
This deliberate strategic step has been achieved by implementing policies, as they have done repeatedly for nearly 50 years, targeting groups of strategic industries relevant to the prevailing economic conditions. Porter’s view, in terms of national competitive strategy, is that governments operate best when they are slow to adopt control policies and quick create conditions that are favourable or at least benign to allow cluster industries to flourish (Porter 2008). Whilst not perhaps exemplary, the Korean Government has indeed developed policies to create favourable conditions for its export ambitions with incentives including:
Reduction of corporate and private income taxes for exporters,
Tariff exemptions for raw materials imported for export production,
Business tax exemptions, and
Accelerated depreciation allowances
Linkages to educational establishments
Human resource development
(UNCTAD Handbook 2009).#p#分頁標題#e#
In 2007, the value of merchandise trade (combined imports and exports trade - OECD) was equivalent to 44% of GDP compared with 36% five years earlier in 2002 (UNCTAD 2009), and from a mere 10% of GDP at the beginnings of the export-oriented industrialisation era of Park Chung-Hee in the early 1970s (Clifford 1994).
Foreign direct investment (FDI) is positively correlated with a competitive economic strategy and cluster development can be greatly accelerated by attracting cluster participants from other nations (Porter 2008). The Korean Administration has pursued policies of subsidised imports to attract FDI to boost the economy with the ambition of matching the economies of the nations of the west, particularly the USA. Historically the USA has always affected Korean policy.
The USA market was worth $48 billion to the Korean economy in 2008 in terms of export. The direction of trade with between the Korea and the USA is clearly always towards the USA albeit, since 2000, slightly trending downwards. Korea has had a policy of reducing dependency on the USA for several years (US State Dept) but it still is a significant factor of the economy.
The strategy based on exports has worked well generally and has transformed the economy. Today Korea is the world’s 11th biggest exporter. In 2008 South Korea shipped $422.5 billion worth of exports. (CIA WORLD FACT BOOK).
Source OECD stats.com
The following are the main exports of Korea (percentage of all exports):
Electronic products (33%),
Machinery and transport equipment(20%) ,
Petrochemicals(8%)
Digital telecommunications equipment(6%),
Plastic Components(5%),
Steel(5%),
Ships(2%),
(International Trade Centre Statistics – www.intracen.org )
The main exports partners of Korean republic
Source International Trade Centre Statistics – www.intracen.org
Despite tensions between North & South Korea, the North is actually a major importer of products from the South Korea. In 2008 exports from South to North were $1.82 billion (US dept of State 2009). In the main this was BPO, business process outsourcing, such as assembly work being sent to a lower labour cost region. South Korea is North Korea’s second largest trading partner after China (US Dept of State).
As stated the Korea economy is export led but is also heavily reliant on imports. The current account is maintained near balanced although from 2000 until mid 2007 there has been a surplus of trade. The last quarter of 2007 was the start of a dramatic slowing of growth due to the world economic crisis.#p#分頁標題#e#
The heightened importance of balance of trade in the Korean economy is intentional, leveraging strong exports (see graph below). It is policy that is susceptible, however, to the vagaries of the world’s economy. The IMF had to intervene in 1997 during the Asian financial crisis to support the country and growth slowed quite dramatically in 2008 and nearly halved with the onset of the global economic crisis.
Source International Trade Centre Statistics – www.intracen.org
The performance of the Korean economy, whilst remarkable, being export led and reliant on imports does have some inherent risks. Many factors of production are outside of its direct control. An example is oil. Korea is the 11th largest import of oil in the world (CIA fact book 2009) and consumes in excess of 2,150,000 barrels a day which is 2.5% of the world’s daily consumption. The price of oil will inevitably rise over time as it gets hard to produce. Korea will have to find alternatives. Other major imports that are vital to its industry are (percentage of all of imports):
Organic chemicals and plastics (31%)
Electronics and electronic equipment (17%)
Industrial machinery (10%)
Steel (5%)
Ores (3%)
(International Trade Centre Statistics – www.intracen.org )
Trade reliance with other nations does make Korea susceptible to the peaks and troughs of the economic cycle in other nations. Should trading partners suffer a slow down this can impact on Korea greatly. The following countries provided the major share of Korean imported products in 2009:
Source International Trade Centre Statistics – www.intracen.org
Other Factors
The major economic countries of the world have very well developed infrastructures. Road, rail and air links are key determinants of a nation’s economic competitiveness (Dodonov, von Hirschhausen, Opitz, and Sugolov 2002) especially nations in transition. Following the establishment of UN/US backed government in the 50’s, Korea set about creating a well-developed infrastructure and transportation network (CIA fact book 2009). In the ensuing years, the government committed significant investments to expanding its highways, railroads, seaports, and airports to build a modern and efficient system. The majority of domestic trade uses ground transportation. Korea’s geographic location, surrounded almost entirely by water, correlates with its standing as one of the world’s leading ship builders (New World Encyclopaedia).
Technology has been central to Korea’s economic growth in the 21st century (Economic Research Institute). Currently leading the world in the development of information and communication technology, according to the Economist Intelligence Unit global innovation index which uses triadic patents (corresponding families of patents registered in the USA, Europe and Japan for the same invention by the same inventor i.e a significant invention) sought by population size to measure innovation, in 2009 Korea ranked 7th in terms of innovation capability. The country was also ranked 6th by INSEAD in its global innovation ranking behind the USA (1st), Germany (2nd) and Singapore (5th). Korea has the world’s largest and quickest internet broadband network. Korean companies are in the vanguard of mobile phone technology development.#p#分頁標題#e#
The almost meteoric rise in the innovation rankings since 2007 is credited again to the policy regimes put in place by the government. These policies saw a marked move away from a labour and capital intensive heavy industry toward a knowledge based economy. Whilst not quite light touch but not central control either, the Government facilitated this by creating conditions to develop relevant skills in the labour force to catalyse technological changes (INSEAD GII 2009). The Government also put itself right in the centre of the users of technology by conducting all government procurement via e-commerce. In 2004 the OECD identified Korea as the benchmark for e-commerce government systems.
The government gave further impetus to the shift towards technology and communications by facilitating collaboration between universities and businesses, establishing techno-parks, innovation centres and techno-business incubators. This had the dual purpose of sharing innovation and developing a qualified manpower and knowledge base (INSEAD GII 2009).
It is perhaps an obvious requirement that efficient labour is a key factor in creating and sustaining a competitive economy. Korea’s workforce is being developed but is has some structural problems that still have the potential to be the Achilles heel to its ‘new’ economy. The issues are ageing population, productivity and flexibility.
Korea has very low fertility rates (UN world population prospects 2008) i.e population replacement. The consequence of this is that the working age population is getting older (the population is the most rapidly ageing in the OECD countries) and it is predicted to peak in 2030 with approx 20% being over 65 (Ik Ki Kim, UN secretariat 2000). Therefore the country will face labour shortages and is likely to need to import skilled labour which is inefficient.
The labour force is already moderately well educated, but there is a mismatch in skill sets. 30% of graduates do not find jobs in their field of study (OECD policy brief, Economic Survey Korea 2008). The government is trying to develop better education at all levels targeted on the skills needs of tomorrow. However, this is a slow process and education spend is comparatively low only ranking (71st) in the GCR 08 i.e just in the upper quartile. The quality of education is ranked 29th i.e the upper quartile, however, with notable achievements in tertiary enrolment (3rd), the quality of mathematics and science education (11th) and internet access in schools (5th).
Other counter competitive issues in the Korean labour resources are linked to its ridged labour regulations. There is a need for more constructive relations between management and workers (US State Dept). Korea has a history of militant unionism which has driven government policy (Umashanker 2004).
#p#分頁標題#e#
Within competitive strategies businesses tend to move from inefficient locations to more efficient ones (Porter 2008). Clearly then labour unit cost to productivity are important to competitiveness. Whilst Korean wage levels are comparatively low compared to the US or Europe, they are tending towards high compared to other countries in the region and there is a lag in output. The Korean government are worried about the increasing diversion of FDI to China and other low labour cost countries (WWW.korea.net/2009). This is compounded by Korea’s union issues which undermines the country’s attractiveness as a place to do business.
A survey carried out by the Korean Labour Institute in 2009 established that the general population of Korea believed labour relations in their country were “oppressive” and that “law and order” needed to be established to achieve a balance in relations away from the Unions. A further survey effected by the Institute provided clear evidence that external investors saw the poor labour relations as problematic to doing business in the country coupled with poor government polices to deal with the issues. Union issues persist in Korea. The Korean Labour Institute declared the outlook for employee relations to be problematic in 2010.
Restrictive labour regulations is seen as 3rd most problematic factor for doing business in Korea after policy instability (1st) and government bureaucracy (2nd) (GCR 08). In the World Bank Economy rankings 2007 Korea’s labour efficiency ranked only 150th out of 183 and is therefore a clear impediment to the country in terms of ease of doing business in the country. In every aspect of the OECD measures on Korea’s labour force it is significantly worse than the average amongst the OECD countries including hiring, rigidity of hours, terms and conditions of employment and difficulty in redundancy and associated costs.
Context for Firm Strategy and Rivalry.
Porter states that national performance is the product of the strategies and the structure of the firms in its economy. Competition between companies drives innovation and the subsequent resultant development of competitive advantage through efficiency (Porter 2008).
Obviously domestic competition impacts earlier than competition brought by foreign competitors. Therefore it is in the interests of national governments to create the conditions to stimulate competitive rivalry locally. Cost of start up, tax regimes, protection of intellectual property, the ease of being able to obtain credit and access to skilled labour are key areas.
The economic system in Korea incorporates elements of both state capitalism - the old economy - and the “new” economy cultivating free enterprise (US Dept of State).
In the old economy the Government relied on the chaebols as a means towards economic growth (Park, Sin & Shu 2008). The country had a shortage of entrepreneurial talent, there was a need to defray ROI risk and large companies, in the old economy, created jobs. The economy became dominated by these chaebols in areas such as iron and steel, utilities, communications, and other heavy industries. Arguably developments in ship building, car manufacture and semi conductors would not have happened but them for them. However, the chaebol-led industrialisation accelerated the monopolistic and oligopolistic concentration of capital and profitable activities into the hands of a limited number of conglomerates (Park, Sin & Shu 2008). Competition was limited and at the point of collapse in 1997 the top 30 chaebols produced 16% of South Korea's GDP and accounted for 41% of manufacturing value added and 50% of exports (Mckinsey Global Institute 1998).#p#分頁標題#e#
Source New World Encyclopedia
Government reforms were introduced in the late 90’s to reduce the effect of these chaebols. By 2001 only 50% of the largest chaebols remained. They are still significant to the economy e.g Samsung is the world’s largest conglomerate by revenue $174 billion, but their operation has been reformed and they are not the hindrance to competition they once were.
Further Competitive Conditions
Korea is ranked 19th out of 183 countries in the Ease of Doing Business rankings published by the World Bank. This is behind other countries in the region - Singapore (1st), Hong Kong (3rd), Thailand (12th) and Japan (15th) see below. Nonetheless, it is again in the upper decile.
It is positively rated (5th) for commercial law i.e contracts and the cost and time taken to resolve disputes, and is (8th) for cross border trading whilst ability to get credit is ranked (12th) All these contributed to its overall ranking of 19th.
Korea scores less well for investor protection and it is ranked (79th) which is just inside the top 50% with shareholder protection and the tax burden dragging down the score.
Korea’s protection of intellectual property rights is adequate and like many countries could be improved. However, on the whole, its record for protecting these rights is consistent with its record on protecting investors and property rights in general as ranked in the GCR08. In the ranking of the Intellectual Property Rights Index (world bank), the country is ranked 25th which is behind Singapore (3rd), Hong Kong (12th) and Japan (17th). This is surprising given the ICT innovation ranking. Nonetheless, Korea is a member of the World Intellectual Property Organization (WIPO), Paris Convention, Berne Convention and signatory to the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). These treaties and agreements give confidence and encourage entrepreneurs and businesses to develop new products and processes. Such innovation is a driver of economic growth and competitiveness (WIPO).
Related and Supporting Industries.
These industries are a broad determinant of national advantage (Porter 2008). The presence of national and international competitive suppliers create advantages in the supply chain in terms of innovation, cost effective inputs to design and delivery of services and products, shortened lines of communication, information and exchange of ideas.
The economic crisis in Asia in 1997 affected Korea greatly and a broad consensus developed amongst the countries policy makers that the old Korean economic development model, focusing largely on copying and reverse engineering, had become obsolete, especially as economic importance of intangible knowledge became increasingly important (World Bank). Consequently, in recent years, Korea’s government has promoted the development of higher-value knowledge based clusters away from heavy engineering and manufacturing and continues the theme of the countries administration morphing to the prevailing economic conditions whilst creating conditions for an holistic development of a new economy.#p#分頁標題#e#
The KD4 programme was established and 2000, the country put into effect a three-year action plan for implementing the Knowledge Economy strategy. It consisted of 83 associated action plans in the five main areas of information infrastructure, labour development, and the development of knowledge-based industry, science and technology, and elimination of the digital divide. The plan was led by five working groups that involved 19 Government departments and 17 research institutes (World Bank).
As previously noted, the country has achieved considerable success in developing its ICT sector. It now contributes 17% of the country’s GDP and provides 30% of the GDP growth rate. Korea is now the world’s largest exporter of ICT related products (DRAM, mobile phones, TFT-LCD, PC, Auxiliary Storage) and in 2008 had approx 50% of the worlds combined market (world bank). The coordinated approach of government and business has created favourable conditions for Korea to continue to flourish even during the worse world economic crisis for 80 years in 2007/08
Demand Conditions.
Although Korea is a high-income country (World bank) it has a relatively small domestic market. The country does benefit from the size, dynamism, and growth of its close trading partners: N. Korea, China, and the USA its long time ally (see earlier statistics regarding exports and imports)..
Korea is being actively courted by the Association of South East Asian Nations (ASEAN) to join its free trade area. Korean-ASEAN trade is worth in excess of USD28 Billion each year (ASEAN secretariat).
CLUSTER ANALYSIS
CLUSTER ANALYSIS
SHIPBUILDING CLUSTER
Major products of Korean Shipbuilding involve tankers, containerships, gas carriers, bulk carriers, special purpose vessels, and offshore units. Thanks to Korean Shipbuilders’ innovative processes, quality, delivery, and customer services, seven of the Korean shipbuilders took part in top 10 Global Shipbuilders. (The Korea Shipbuilders’ Association, 2009) Due to the competitiveness in the market, Korean shipbuilders also prefer to extend their product supply and serve to the niche markets with their strong engineering background and high-quality concept. Therefore, they have recently concentrated on niche markets like icebreakers, LNG’s tankers. (Hassink & Shin, 2005)
Korean Shipbuilding cluster completed 26,379,000 GT (520 ships) in 2008 accounting for 39% of global ship completions and maintained its leadership in global market. Korean Shipbuilders have been competing with Japan and China in global market. (The Shipbuilders’ Association of Japan, 2009)
Figure: Korean Shipbuilders’ performance by completions.#p#分頁標題#e#
Source: Shipbuilding Statistics (The Shipbuilders’ Association of Japan, 2009)
Figure: Korean Shipbuilding Cluster’s competitors
Source: Shipbuilding Statistics (The Shipbuilders’ Association of Japan, 2009)
Figure: “New Orders” Development of Korean Shipbuilding Cluster
Source: Shipbuilding Korea 2009 (The Korea Shipbuilders’ Association, 2009)
Main participants of the cluster are research organizations, related clusters, suppliers, government and unions, and IfC’s.
Fig. Korean Shipbuilding Cluster Map
Core Cluster:
In addition to nine medium and large shipyards, there are also 120 smaller shipyards in Korea. Hyundai Heavy, Daewoo Shipbuilding, and Samsung are accounting for 68% of the domestic market and leading global market as number 1, 2 and 3 respectively. (InvestKorea, 2005)
Source: Localization: Making it big with the shipbuilders (InvestKorea, 2005:6)
Korean shipbuilding companies have focused on the innovation and development of the competitiveness by evolving production and assembly methods. (The Korea Shipbuilders’ Association, 2009)
Table: Innovations made by Korean Shipbuilders
Innovations
Year
World’s Largest Block Manufacturing Technology
2002
World’s first Onland Shipbuilding Technology
2005
Ship-Bow’s Underwater Assembly & Mounting Technology
2005
Skid Launching System Utilizing Building Technology
2007
Korea’s First Medium-Size Marine Diesel Engine
2000
LNG Re-Liquefaction System Technology
2007
LNG Re-Gasification Vessel
2003
Arctic Ice-Breaking Oil Tanker
2006
Source: Shipbuilding Korea 2009 (The Korea Shipbuilders’ Association, 2009:22 )
Majority of the shipbuilders located their headquarters in Seoul and shipyards in different cities and even in different countries, especially in China to tap the local human resources and advantages. Ulsan and Gyeongam where majority of the shipyards located provide some unique advantages for the shipyards like deep water and paucity of the sand. Additionally, these locations are considered as safe and secure in terms of military issues, and offer commercial advantages since many of the cluster members located in this region. 1 (Hassink & Shin, 2005)#p#分頁標題#e#
Figure : Locations of the large shipyards
Source: Shipbuilding Korea 2009 (The Korea Shipbuilders’ Association, 2009:54)
Table: Korean Shipbuilders’ investment worldwide
Samsung Heavy Industries
Ningbo Block Factory in Jiangsu Province, China
Rongchen Block Factory in Shandong Province, China
Daewoo Shipbuilding & Marine Engineering
Mangalia Shipyard in Romaina
Yantai Block Factory in Shandong Province, China
Hanjin Heavy Industries & Construction
Subic Shipyard in Subic Bay, the Philippines
Hyundai Mipo Dockyard
Vnashin Shipyard in Vietnam
STX Offshore & Shipbuilding
Dalian Shipyard in Liaoning Province, China
Dalian Block Factory in Liaoning Province, China
Source: Shipbuilding Korea 2009 (The Korea Shipbuilders’ Association, 2009:26)
Employee number in Korean shipbuilding cluster was 101,632 in 2008. While only 15% of the positions in shipbuilding are related to management and engineering positions, 85% of the positions are directly related to skilled workers. This shows that shipbuilding is a manpower based industry. (The Korea Shipbuilders’ Association, 2009)
Figure: Number of Employees
Source: Shipbuilding Korea 2009 (The Korea Shipbuilders’ Association, 2009:7)
Hyundai Heavy Industries Co., Ltd
HHI, one of the most famous shipbuilder’s, located in Ulsan, was established in 1972, delivered more than 1320 ships to 45 countries and currently has 12% of global market share. HHI focused on strengthen its position in the market by improving jack-up drilling rigs and semi-submersibles. HHI developed its facilities and production processes by improving project management capability. It has the first T-shaped dry-dock in the world, this facility enables HHI to construct two ships concurrently and hence double its production capacity per year. (The Korea Shipbuilders’ Association, 2009)
Samsung Heavy Industries Co., Ltd.
SHI was established in 1974 and located in Seoul. Its shipyard is in Geoje peninsula. SHI has the largest dock and highest dock turnover rate on earth. Samsung is also famous for its efficient process utilizing giant cranes, ship blocks which provides shorter time periods for the engine installation. SHI constructed the first multi-directional oil tanker with icebreaker capability. This prominent tanker was awarded with IR52 Jang young- Shill award. (The Korea Shipbuilders’ Association, 2009)#p#分頁標題#e#
Daewoo Shipbuilding & Marine Engineering Co., Ltd.
Its Headquarter is located in Seoul. DSME was established in 1978 as a branch of Daewoo Business Group and became independent in 2000. Its shipyard is in Geoje peninsula. It has delivered approximately 800 ships to its customers. DSME has deep technology know-how of designing ships with highest efficiency and easy controlling. (The Korea Shipbuilders’ Association, 2009)
Hyundai Samho Heavy Industries Co., Ltd.
HSHI has the fifth-largest manufacturing capacity in the world. Its headquarter is located in Jeollanam-Do and it has been active in the industry more than 20 years. Its shipyard is in Samho. HSHI has completed the construction the world’s largest ship onshore by utilizing giant cranes, large blocks. (The Korea Shipbuilders’ Association, 2009)
Hanjin Heavy Industries & Construction Co., Ltd.
Its headquarter is located in Busan. Hanjin HI has been active in the industry more than 70 years. Up to now, it has delivered 1000 ships. It has located its shipyards in two different locations, Yeongdo and Subic in Philippines. (The Korea Shipbuilders’ Association, 2009)
Hyundai Mipo Dockyard Co., Ltd.
HMD was established in 1975 and is located in Ulsan. It has reputation for building medium-sized conventional ships and specialized vessels. It has two shipyards, one is in Ulsan, and the other one is in Vietnam. (The Korea Shipbuilders’ Association, 2009)
STX Offshore & Shipbuilding co., ltd.
Its headquarter is located in Gyeongman. It has two shipyards in Korea, one (Dalian) in China, and 15 in Europe. STX aimed to utilize the geographical advantages and technological know-how of different locations. It is famous with VLCC, LNG Carriers and 14,000 TEU containerships. (The Korea Shipbuilders’ Association, 2009)
SLS Shipbuilding Co., Ltd.
It was established in 1946 and located in Gyeongnam. Its shipyard is located in Geoje peninsula. SLS is famous for its MR-size tankers. (The Korea Shipbuilders’ Association, 2009)
Dae Sun Shipbuilding & Engineering CO., Ltd.
It was established in 1945 and located in Busan. It constructs fisher vessels, oil tankers, bulk carriers, container carriers. (The Korea Shipbuilders’ Association, 2009)
Research organizations:
There are 14 universities providing educational programs for naval, marine, ocean and design engineering and 2 colleges providing training to engineers in Korea. The Korean government strongly supports the industry and has sponsored R&D centers and training facilities. (Shin, 2008)#p#分頁標題#e#
Seoul National University, Busan National University and Inha University are the key partners for the shipbuilders in Korea in R&D activities and 300 students graduate from these universities every year. (Hassink & Shin, 2005:17)
The ministry of commerce, industry and energy initiated technological roadmap for the shipbuilding cluster. In this context, The central government established Korean Marine Equipment Research Institute (KOMERI) to carry out R&D activities with shipyards cooperatively. This initiation was supported by central and local governments in terms of monetary and technological issues. Additionally, Korean shipbuilders were encouraged to collaborate with Korean universities in R&D activities. (Hassink & Shin, 2005)
Large shipbuilders established R&D centers like Hyundai’s Maritime research Institute, DSME’s Ship and Ocean Institute, Samsung’s Shipbuilding and Ocean Research Center. Additionally, the government established the Center for Telecommunications Technology Research and The centre for Production Technology Research at the end of 1990’s. (Hassink & Shin, 2005)
Korean shipbuilders have established collaborations and organized education programs with the universities to promote the growth of manpower. In this context, Hyundai Mipo Dockyard (HMD) and Mokpo Polytechnic College, Hyundai Heavy Industries (HHI) and Ulsan Polytechnic College and Busan Vocational Training Institute, STX Offshore & Shipbuilding and Changwon Polytechnic College and Sungdong Shipbuilding to Jinju Polytechnic College established collaborations regarding the development of the human resources and R&D activities. Additionally, DSME purchased Koje College and started using it as R&D center and workforce supply. (The Korea Shipbuilders’ Association, 2009:26)
Related Clusters
Korean Shipping Industry ranked sixth with its 36,760,000DWT and its 3,4% share in world fleet in 2007. HJS and HMM shipping companies are among the top shipping companies in the world. There are totally 164 companies registered to Korea Shipowners’ Association. Their total revenue was approximately $36.6billion in 2007. Although shipbuilding and shipping clusters are leading their sectors globally, there is a very weak business relation. (Lim, 2008)
Suppliers
70% - 80% of the products are produced in Korea and majority of this production is coming from Gyeongnam. (Hassink & Shin, 2005)
There are totally 153 Ship machinery and equipment manufacturing companies in Korea. According to Korea Marine Equipment Association, more than half of the Ship Machinery and Equipment manufacturers located in the eastern side of Korea, mainly in Busan. (KOMARINE, 2004)
Table : Supplier’s Product Dispersion Figure : Supplier’s Geographical Dispersion
Manufacturers
Number
Propulsion Arrangement
4
Auxiliary Arrangement
35
Piping Equipment
25
Mooring/Cargo Arrangement
11
Nautical Equipment
9
Accommodation Equipment
16
Safety Equipment
3
Others Outfitting
19
Electric Electronics
23
Others
8
Total
153
Source: Performance Records (Korea Marine Equipment Assocation)
Ship machinery and equipment production comprises Hull, Engines & Machinery, Outfitting, Electric & Electronics. Ship machinery & equipment production volume was 9.75 trillion won in 2004. (KOMARINE, 2004)
Table: Main Supplies’ share in total production
Production Output (%)
Hull
5%
Engines and Machinery
55%
Outfitting
27%
Electric & Electronic
14%
Source: Performance Records (Korea Marine Equipment Assocation)
As demonstrated in Table, Engines & Machinery has the largest portion compared to others.
There are four engine and machine manufacturing companies in Korea: Hyundai Heavy Industries, HSD, STX Corporation, DaiDong Machinery Ind. (Kim, 2009).
Ship Engine manufacturers in Korea got licenses from the European engine manufacturers and manufactured machines under the name of these companies. By time, they could establish know-how and started manufacturing their own trademarks.
Steel is supplied by domestic suppliers. The largest one is POSCO ranked number 4 in the world, located in Phang, north of Ulsan, provides price advantages to the shipbuilders due to its productive efficiency. Hyundai and other large shipbuilders purchase steel from POSCO. (Hassink & Shin, 2005) The other steel manufacturers and suppliers are Dongsunk Steel and Hyundai Steel. (Kim, 2009)#p#分頁標題#e#
While Shipbuilding companies of conglomerates can buy electronic and other auxiliary parts, and from their sister companies in the group, the others import these materials from global suppliers. (Hassink & Shin, 2005)
Local suppliers have also become global suppliers and exported their products to different countries. The largest customers of the Korean suppliers are Japan and European Union countries. The lion share belongs to Engine and Machinery in exports again. (InvestKorea, 2005)
Table: Suppliers’ Export
Country
Hull
Engine and Machinery
Out Fitting
Electronics
Total
JAPAN
7,598
44,506
74,846
27,993
154,94
CHINA
813
40,369
10,508
8,511
60,201
E.U
1,18
255,719
4,673
2,878
264,45
The Other Country(Singapore, USA.,Taiwan, Pilippines,Kuwait,Russia,etc.)
7,386
27,935
34,053
16,643
86,017
Total
16,98
368,529
124,08
56,025
565,61
Thousand USD
Source: Performance Records (Korea Marine Equipment Assocation)
Korean Shipbuilders imports some products from other countries like Japan, USA, and Germany. Mostly imported items are engines, turbines and their related parts. (InvestKorea, 2005)
Table: Suppliers’ Import
Product Type
Imported From
Amount (mio USD)
Propulsion Equipment
Japan, USA, Germany,New Zealand
394
#p#分頁標題#e#
Auxilary Equipment
Norway, Japan
131
Mooring Equipment
China
3,2
Lodaing/Unlodaing Equipment
Norway, UK
12
Fishing Equipment
Japan, Norway
64
Safety Equipment
China, Japan
2
Power Distributor Equipment
Japan, Germany
7,9
Instrument Type
Japan
70
Source: Localization: Making it big with the shipbuilders, (InvestKorea, 2005:7)
Government and Unions:
Although shipbuilders compete with each other, they co-operated in certain areas to compete with foreign competitors. Engineers of Korean companies exchanged their learnt lessons with each other during the informal meetings. Additionally, companies established co-operations to overcome technological problems they confronted. (Hassink & Shin, 2005)
Table: Alliances established by shipbuilders
Cooperation Topic
Participants
Period
Budget (Mio Won)
Improvements of Manoeruability for VLCC
Samsung, Hyundai, Daewoo, Hanjin, Samho, KRISO
1994-1996
1,2
Designing Technology for Building Small Passenger Ships
Samsung, Hyundai, Daewoo, Hanjin, KRISO
1995-1997
485
Technology Development for the Next Generation Ships Manufacturing
Samsung, Hyundai, Daewoo, Hanjin, KRISO
1995-2000
14,548
Measuring Manoeurability of Ships
Samsung, Hyundai, Daewoo, Hanjin, KRISO
1997-2000
300
Electronic Business in Shipbuilding Industries
Samsung, Hyundai, Daewoo, Hanjin, KRISO
2000-2000#p#分頁標題#e#
200
Development of Analytical Program of ISO Speed Trial Standards
Samsung, Hyundai, Daewoo, Hanjin, Samho, Hyndai Mipo, Daedong, KRISO
2000-2001
151
Shipbuilding Industry
Samsung, Hyundai, Daewoo, Hanjin, KRISO
2000-2003
3,51
Revision of IMO standards
Samsung, Hyundai, Daewoo, Hanjin, Samho, Mipo, Daedong, Shinah, SNU, KMU, KRS, KSSRI, KRISO
2001-2002
109
Source: South Korea’s Shipbuilding Industry:From a Couple of Cathedrals in the Desert to an Innovative Cluster (Hassink & Shin, 2005: 18)
Shipbuilders have also established organizations to increase collaboration between the companies, execute researches and studies, and provide common understanding on productivity and technology.
Shipbuilding Organizations in Korea (KOMARINE, 2004):
The Korea Shipbuilders’ Association
Korea Maritime & Ocean Engineering Research Institute, MOREI
Korea Shipbuilding Industry Cooperative
The Society of Naval Architects of Korea
Korean Register of Shipping
Korea Marine Equipment Association
Korea Shipowners’ Association
Korea Maritime Institute
Due to the paucity of the qualified technicians, Korean shipbuilders don’t limit themselves with the local workforce and like to attract qualified workforce from overseas. In this context, shipbuilders’ associations asked from government to establish a new system for the foreign experts especially for welding technicians. The government designed a new “gold card” system which enabled companies to hire foreign experts. 2 (The Korea Shipbuilders’ Association, 2009)
Local (provincial) government of Gyeongnam planned to assist the cluster and develop R&D activities and infrastructure in its region. In this context, Municipality of Geoje where Daewoo and Samsung shipyards located created a team of 4 people to assist shipyards and their spin-offs in terms of administrative and management services, manufacturing areas. 1 (Hassink & Shin, 2005)
IfC’s:
The government has been supporting shipyards with its financing institutions. Korean Exim Bank provides financing for the shipbuilding and shipping companies. Appoximately 500 billion Won loans will be served to shipbuilders to construct new ships in 2010. There are also asset management companies like KAMCO which helps shippers to deal with liquidity problems and insurance companies like Korea Export Insurance Corporation which reduce the risk of shipping lines. (Sun- Young, 2009)#p#分頁標題#e#
CLUSTER LEVEL RECOMMENDATIONS
Korean shipbuilding related industries, steel and engine equipment manufacturing, are not as strong as in other rival countries. For this reason, Korean shipbuilding industry became dependent on the global market for the critical parts of ships due to lack of rivalry in domestic market. Related industry can be stimulated by new policies to manufacture more parts of ships.
Additionally, new policies encouraging shipping in Korea can be established. By doing that, domestic market can be created.
Cluster is highly concentrated on engineering skills and has not paid enough attention to low-medium level work force. To solve this problem, companies and government can establish collaborations with the universities and R&D centers to grow the number of qualified low and mid level workforce.
To become more competitive in Global market, Korea should support shipbuilders in terms of financing options and shipbuilders should provide financing options to the customers. In this context, finance sector can be enforced to take part in the cluster more actively. Additionally,
CLUSTER DIAMOND AND PERFORMANCE
RECOMMENDATIONS
COUNTRY LEVEL RECOMMENDATION
CLUSTER LEVEL RECOMMENDATIONS
Korean shipbuilding industry became dependent on the global market for the critical parts of ships due to lack of rivalry in domestic market. Related industry can be stimulated by new policies to manufacture more parts of ships and high profile materials which provides advantages against global competitors to the shipbuilders. .
New policies that can encourage shipping in Korea can be established. Korean shipping industry can be encouraged to purchase Korean ships and to increase domestic order. By doing that, domestic market can be created and shipbuilding industry can protect itself from global economic crisis.
Cluster is highly in need of low-medium level work force –technician level- to maintain its competitiveness. To solve this problem, universities and R&D centers should concentrate on growing the number of qualified low and mid level workforce. People should be prod into working in shipyards by incentives provided by the companies and the government.
To become more competitive in global market, Korea should support shipbuilders in terms of financing options. Shipbuilders should be able to provide financing options to their customers. In this context, finance sector can be enforced to take part in the cluster more actively.
Shipbuilders can expand their product range and focus on environment friendly products like less carbon emissions. To differentiate themselves from global competitors like Chinese companies, they should create high-tech ships.#p#分頁標題#e#
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