Non-Centers = No Innovation, No Creative Economy

This map shows what's wrong with innovation in Korea: each "Center for Innovation and Creative Economy" is led by one chaebol, but the startup ecosystem demands actual clusters* and truly open approaches.

Korea innovation centers* too chaebol-centric. Startup ecosystem needs real clusters
* koreajoongangdaily.joins.com/news/article/article.aspx?aid=3007182 (KJD 20150729)

The contradiction is obvious, but the Korea JoongAng Daily article this map came from ("Outside Seoul, new centers have a sleepy feeling" - 20150729) doesn't even mention it as a reason why these centers fail, like all attempts from previous administrations.

Again (see my essay on "Heralding cultural diversity - a stronger and more sustainable Korean wave" - particularly part III, on the business dimension), the chaebol seldom act as true cultural leaders, and that's a drag for the nation.

Yet change is coming to Korea. In spite of the inability of most chaebol to truly adapt, and of governments to push for true reforms. And if these changes are not necessarily positive, they make Korea Inc.'s posture even less sustainable.

As expected (see "The Bigger, The Bitter"), the money recently poured over the nation by Google and many major international V.C.s to put a lock on the most promising startups is at the same time fueling the local and global bubbles, and weakening the chaebol sphere of influence. Now being the only new kid on the block isn't enough, and the time Yellomobile could purchase dozens of startups for a song has ended.

One of the most positive side effect could be the evolution of mindsets towards enterpreneurship and startups. The fear of failure, a major impediment to innovation in Korea (see "Too proud to fail? Not so simple."), is on the vane. 

And that's not just blind belief in the latest tech bubbles: more among the nation's brightest students prefer to give it a try rather than join Samsung and Co. even if they know chances are not on their side. They welcome failure as a positive experience, and they know that it's better to start with it, that they will learn more during these 'wasted' months or years than by following the mainstream lemming race.

Now Korea also needs a couple of greatly successful failure stories, and a fairer balance between the conservative and the disruptive.

I'm feeling certainly more optimistic than a couple of years ago, and I've met more than a few young brilliant minds trying promising things. They know they can't expect much from the big fishes or from the government, but it wouldn't hurt if said big fishes and said government actually decided to prove them wrong.

Seoul Village 2015
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* and it's not just about bringing everybody on the same place either (see "Redrawing Korean Maps - Innovation Clusters")

Governance Leaks

I returned to Seoul right on time for the wettest season. Yes I'll quickly grow tired of it, but for the moment, it's good to feel some rain after a Paris under 41 Celsius and an extremely sunny - but always fabulous - Istanbul.

Also good to enjoy a sound doenjang jjigae after overdoses of delicious cheese and kofte.

40 degrees in Paris. How do we frogs fight the heat?
Why, with cheese of course!
(20150704 - twitter.com/theseoulvillage/status/616989511713689600)

And finally, "good" to see that nothing has changed while I was away:

• In South Korea, Samsung narrowly won the votes needed to pass the C and T - Cheil Industries merger. Elliott Management hasn't given up yet.
• In Japan, Shinzo Abe won the non-vote for his war bill, bypassing democracy to force the restoration of militarism down the country's throat in spite of a majority opposing it (see "Japan taking a stand against ABEIGNomics?").
• In North Korea, Kim Jong-un's regime won local elections with a 99.97% turnout, and a 100% approval rate. In total transparency, the dictator holds one ballot paper in each hand, just to make sure:

For Kim Jong-un like for any other dictator, elections are always a walk in the park (20150723 - twitter.com/theseoulvillage/status/624129742157971456)

Democracy-wise, we're all EARS (East Asia Respiratory Syndrome).

Of course, Europe remains an even better model of governance. Note that one of the Europe in the Greek mythology gave birth to a few of the famous Danaides - you know, the young ladies who murdered their husbands, and have ever since been forced to fill with water a pierced jar.


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The Bigger, The Bitter

Yesterday, Daum and Kakao Corp announced that they would merge on October 1st, and Google that its first Google Campus in Asia would be located in Seoul.

The Daum Kakao merger looks rather defensive: before everything, it creates a stronger competitor to NHN, the leader operating among others the main rivals to Daum and Kakao Talk: Naver and LINE.

NHN and Daum are rare exceptions as successful newcomers in a country where start-ups struggle to survive in an ecosystem dominated by chaebols: as soon as a new gem shows some potential, the big fishes try to eat it, or to destroy it with me-toos leveraging on in-house countless entry points, or to control it by becoming its sole 'partner'. 

NHN and Daum could storm the web at the turn of the millennium, when mobile operators where busy building proprietary environments, and other chaebol focusing as usual on hardware. They built competitive platforms that even resisted Google, who only managed to gain strongholds in Korea thanks to Android. Typically, even if Naver maintains its leadership in web searches, Google could 'crowd-boost' Google Maps or Google Translate, with the help of smartphone manufacturers who were too happy to have a platform rivaling Apple to care about the hidden costs.

As we've said before, Samsung and LG helped Google BtoB (OEM) succeed where Google BtoC (portal) failed, and all they can do now is send a Tizen to nibble at the heavyweight champion's ears. 

There's a finite space for major value aggregators in Korea, and as Samsung's latest attempt to build a sustainable platform beyond hardware, Tizen probably accelerated the need for rivals to stretch their reach.

Big G needed to beef up its Asian ecosystem and Korea seems the perfect choice: Android rules, start-ups need competitive platforms to survive chaebol bullies, and Mountain View has the opportunity to weaken some of its most serious competitors on their own turf. Bonus: by supporting Korea's SME and creative ecosystem, you gain the favors of local authorities and regulators.

Anyway, good news for Korea's attractiveness... but yet higher entry barriers for potential major newcomers.


(initially published on my innovation blog as "Daum Kakao, Google Campus... Korean platforms on steroids" - see all posts related to Korea)




ADDENDUM 20140828: let's guess which 'independent' whistleblower suggested Korean watchdog to investigate Kakao Corp in the wake of the merger ("Kakao under probe for allegedly abusing market power: sources")


Seoul Village 2014
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KORUS chorus

The official launch of "Korea matters for America / America matters for Korea", a East West Center - ASAN Institute co-production, was the perfect occasion to celebrate 60+ years of friendship between Korea and the US.

Actually, an earlier launch event titled "Korea and the United States: 60 Years of Partnership Going Forward" took place on the other side of the big pond on December 11th last year, at the Capitol Visitor Center.

Along with the Ambassador of the ROK to the US AHN Ho-young, five Congresspeople attended the Washington, DC launch: Colleen HANABUSA (R-HI), Mike HONDA (D-CA - we already mentioned this great man in "Silver lining, darker clouds"), Mike KELLY (R-PA), David REICHERT (R-WA), Peter ROSKAM (R-IL). East Coast, West Coast, Midwest, Hawaii... you name it!

This morning at the ASAN Institute Seoul HQ, Dr. HAHM Chaibong* welcomed among other dignitaries the US Ambassador to Korea Sung KIM, and two influent members of the National Assembly: HWANG Jin-ha (Vice-Chairman of the Korea-US Inter-Parliamentary Council), and KIM Jong-hoon (Mr KORUS FTA in the eyes of many Koreans - whatever love/hatred they put in the label).

No need to convince Seoul-born US Ambassador to Korea Sung KIM that Korea matters for America and vice versa
twitter.com/theseoulvillage/status/446110479497195520

General KIM Jae-chang (Ret. ROKA, Chairman of the Council on ROK-US Security Studies), Ambassador KIM in the foreground. Among the other speakers, AMCHAM President Amy Jackson.

KIM Jong-hoon (here at the roundtable with Dr. CHOI Kang, Ambassador CHUN Yung-woo, and Dr. Satu LIMAYE) lamented over free trade's loss of momentum globally, and more locally for the Korea-Japan-China FTA (particularly thanks to Shinzo ABE**)
twitter.com/theseoulvillage/status/446139588919033856

Congratulatory speeches set aside, what's "Korea matters for America / America matters for Korea"? A brochure and a platform, part of the "Asia matters for America" initiative created by Dr. Satu LIMAYE, the Director of the East-West Center in Washington. Note that EWC's HQ are truly between continental US and Asia, in the very Korean friendly State of Hawaii.

The bilingual, 34-page brochure co-produced by the two think tanks is a perfect tool to convince any reader of the trueness of its title. Yes, Korea matters for America and America matters for Korea, and at all levels - particularly the four that matter to Ambassador KIM: security, politics and diplomacy, personal and cultural relations, economy.

As a bonus to a brochure mixing perfectly graphics, maps, and statistics, we received a map of the US exports to Korea at the US congressional district level, which is much more precise than the State level. For instance, you can spot Mike HONDA's District, CA-17, the biggest exporter to Korea with $892M in 2012, and a key part of the Sillicon Valley (any famous company from Cupertino in mind, starting with App and ending in le(gal)?).

Beyond the brochure, the platform (where, of course, you can download the brochure). AsiaMattersForAmerica.org/korea is the US-Korea part of the Asia matters for America portal that also covers bilateral relations with China, Japan, India & Co:

In this trove of knowledge, any representative, constituent, businessman or decision maker can measure the value of Asian countries in each congressional district. 

Take for instance Texas 32, another key exporter to Korea - that's NE Dallas around Highland Park, Mesquite, University Park, Garland... and of course Richardson's telecom corridor, home to Samsung Telecommunications America, Inc. You learn that semiconductors and components represent half of the exports to Asia, but also that Asian Americans make up 6% of the population (with more Vietnamese than Koreans), that visitors from Asia bring $120 M to the travel and tourism industry, that Dallas has sister city relationships with Tianjin....

AsiaMattersForAmerica.org/korea

Today, we heard a lot about security, politics, and economy, but of course, it's always about the people. At the top leadership as well as the citizens level, what matters most is the people, and it's no wonder these two think tanks collaborated on this project.


Seoul Village 2014
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* whom we last saw chatting on stage with a POTUS (see "W. at The Shilla for Chosun")

** BTW Leif-Eric, I might eat my hat after all: a PARK Geun-hye - ABE Shinzo does seem more likely than I thought in the short term!

Every other Sunday

From April on, all hypermarkets and big stores in Korea will be forced to close every second and fourth Sunday of the month. The measure aims at protecting smaller players, and diminishing the market share of chaebols.

Of course, HomePlus-Samsung-Tesco, Lotte, eMart-Shinsegae, won't not lose it all: expect even more crowded Saturdays, and the acceleration of substitution by online shopping. And naturally, the clock keeps ticking for the bulk of traditional markets.

Yet I see a potential boost for diversity in leisure and cultural activities.

Seoul Village 2012
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Korean blitz : all bases loaded

The major blackout Korea just experienced may be the consequence of a hacking of KEPCO earlier this year. It also could be due to a simple bug.

I can't help but believe in the first scenario, which would cast yet another unsettling cloud over the country and its security.

Over the past few months, Korea has proven embarrassing vulnerabilities in strategic areas :
- conventional warfare : military / organizational fiascos following North Korean attacks (ie Yeonpyeong)
- hackings / suspicious blackouts at the core of vital networks : financial (ie banks), media / internet, air traffic, and now electricity...

So regardless of who is responsible here (incompetence) or there (most fingers pointing at North Korea or China), a malicious organization could completely incapacitate Korea within minutes without using any conventional weapon. Even if the aim is not an invasion per se (nor even a diversion preceding an invasion of say North Korea), this would definitely damage the reputation of Korea as an economic powerhouse.

With its drive, infrastructures and talents, Korea should be ahead of Israel in national security. KISA (Korea Information Security Agency) significantly improved its visibility, but the national culture remains focused on hardware.

Samsung has eventually understood it needed to evolve and change business models, but it took series of obvious wake up calls (ie Google wolfing down Motorola). The government will probably follow suit. And if spurs are needed, the potential candidacy of Ahn Cheol-soo at the 2012 presidential elections might help : the founder of antivirus specialist AhnLab has some credentials in the area.

Seoul Village 2011
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Korea Inc. united for mobile payments

Ten years ago, SK Telecom would carpet bomb Korea with 400,000 terminals ("dongles") to boost its Moneta mobile payment service. Yesterday, Korea Inc. announced 300,000 NFC-enabled Point Of Sales by the end of 2011 to put the country ahead of the pack in this very very strategic sector.

The difference ? This is not a solo act anymore. SKT alone couldn't succeed in setting the new standard in mobile payments at home and pushing the concept overseas, but this time, the whole value chain and ecosystem is following. And if it works, each player will claim a nice slice of a much bigger pie.

Under the regulator's umbrella (KCC, the herald of "NFC-based Mobile Smart Life Services"), over thirty Korean CEOs met at the Seoul Press Center to sign this decisive MOU in Near Field Communications, and if you throw in the members of the recently formed Grand NFC Korea Alliance, you've got the closest thing to a mobile payment dream team :

- all 3 Mobile Network Operators : Korea Telecom, SK Telecom, U+ (LG Telecom)
- the biggest card players around : Visa, MasterCard, Shinan Card, Kookmin Card (KB), Lotte Card, Hyundai Card, T-Money, MNO partners (Hana) SK Card and BC Card (KT)...
- key authorities and associations : KCC, ETRI, TTA, KISA (Korea Internet & Security Agency), MOIBA (Mobile Internet Business Association), RAPA (Korea Radio Promotion Association)...
- top manufacturers : Samsung, LG, Pantech...
- top enablers: UbiVelox, KEBT, MtekVision, 3ALogics Inc, KICC...
- top payment enablers / billing service providers : KSNet Inc, Mobilians, Galaxia, Danal Corp., KCP...



The only players missing on the picture are the endusers.

And as we saw before, pedagogy will be key in a country where hacking happens to be a national pastime (if you include North Korea in the package), where few people protect their handsets with a PIN code, and where distrust in smartphone security keeps spreading like wildfire.

Of course, "Near Field" meaning 10 cm and below, close encounters of the third thief will require more intimacy than via Bluetooth. Besides, many Koreans are already used to contactless micropayments thanks to T-Money (ie Seoul public transportations and taxis, thousands of convenience stores and vending machines...). Furthermore, NFC trials have been under way for quite a while : for instance KT's "Mobile Stamp" couponing system, SKT's Mobile Commerce Zone or Q Store pilots, or cross border trials between SKT's T-Cash and Japan's KDDI and SoftBank...

This MOU aims at multiplying testbeds and giving momentum to the technology, the bulk of the infrastructure being planned for Q4 2011. So where will NFC-based payments be available ? GS group plans to implement them in its convenience stores (GS25) and gas stations (GS Kaltex). Major retailers (Lotte Mart, Emart...) are joining the party. Seoul and Gyeonggi-do buses and subways, as well as many taxis will be converted. A major shopping area for tourists (particularly from Japan), Myeongdong has been identified as a strategic hotspot to feed the buzz.

Needless to say, the number of NFC-enabled handsets is another essential element in the equation. The alliance targets an ambitious 5 M units by the end of the year, leveraging on existing devices (Samsung Galaxy S II and Sky Vega Racer opened the way), and the Google-Apple war : since Android Gingerbread OS supports NFC, Cupertino had to consider it for iPhone 5.

And oh. This non-event : Samsung is expected to surpass soon Nokia as the world's top handset manufacturer.


Seoul Village 2011 - initially published on mot-bile (see all posts related to wireless in Korea).
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* sorry, not yet in English : "국내 통신사·금융(카드)사 CEO 최초로 한자리에 모여 NFC 서비스 활성화를 위한 MOU 체결"

Cloudy skies over Sejong City

Today's Korea JoongAng Daily exposed a rather grim situation* for Korea's ex-next-capital city : major investors and developpers as well as land owners prefer to cancel their arrival and pay the fine than to move in Sejong City. And many civil servants will leave their families home after the transfer of their administrations from Seoul.

To add insult to the injury, Samsung eventually opted for Saemangeum, a rival presidential pharaonic utopia**, for its future battery plant.

Big companies have decided to cut their losses, but smaller fish won't have a plan B. So after the political and economic failure, a social crisis seems the logical next step.

Food for thought for speculators : if you gamble on non bullet proof concepts, do it at your own risks. And if the concept itself is a Plan B, consider the Plan B's Plan B, or reconsider the value of the original Plan A.

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* see "Korea Inc abandons Sejong" (Korea JoongAng Daily 20110520), and on Seoul Village, previous posts about Sejong City : "About handovers and hangovers", "Pyeongchang 2018 vs Sejong City 2010 ?", "Sejong City and the beauty of lameduckhood", "Sejong City"...
** see "Ari, Arirang, Ari, Ariul City"

DMC at full throttle - Songdo from Sim City to Sin City ?

Remember our parallel between Seoul Digital Media City and Incheon's Songdo International Business District* ? Both project have been advancing since, with Songdo building everything from scratch, and the DMC enjoying many transfers from other districts.

Even for education : the Japan School in Seoul moved from Gangnam-gu to the DMC in Mapo-gu, while of Chadwick International School in Songdo was a creation. To be fair, Songdo also benefited from a major transfer with Yonsei Songdo Global Academic Complex (SGAC), and the DMC has already created many original landmarks as well.

Once again, the Songdo project is much bigger and complex to fill, even after signing such majors as Samsung (ie recently for a biopharmaceutical unit). The local press made a fuss about the recent visit of Vegas casino operators, and Grand Korea Leisure, who operate 7 Luck Casino in Seoul, are considering Jeju or Songdo for a second spot... A new Macau much closer to Shanghai and Beijing ?

Meanwhile, leveraging on Seoul Metropolitan Government's determination to create an international multimedia cluster**, the DMC recently received the confirmation from seven major multimedia groups, including JoongAng, back to the broadcasting arena with growing ambitions. Of course, JoongAng Broadcasting Corporation (JoongAng Media Network) already operated Cartoon Network, J Golf, or Q Channel, but the group lost its leadership after the Tongyang Broadcasting Company breakup (note the new entertainment channel brand, jTBC, as an echo to the pre-1980s). The group also purchased CINUS theaters via Isplus (Ilgan Sports).

Korea's biggest media group already moved to the DMC a long time ago : CJ E&M (CJ Entertainment & Media, formerly O Media Holdings) now regroups all the chaebol's media assets, creating a major in music (Mnet, CJ E&M Music.Live, FNC Music, Good Concert, Jisan Valley Rock Festival, Global Gathering...), movies (CJ Entertainment, CGV...), media (CJ Media, On Media, OCN, chCGV, Story On, tvN, OnStyle, NGC Korea, XTM, Olive, CJ O Shopping, CJ Internet...), and games (CJ E&M Games, BiCore, Netmarble...).

Yet the competition is not just national anymore. And there too, Seoul and Incheon are definitely putting more chips on the table...

Seoul Village 2011

* "Seoul Digital Media City Tour"
** see more recently "DMC aims at Tinseltown - welcome to Hallyuwood !".

Pyeongchang 2018 vs Sejong City 2010 ?

LEE Kun-hee received presidential pardon from LEE Myung-bak, officially to boost the chances of Pyeongchang in its bid for the 2018 Winter Olympics. The son of Samsung founder LEE Byung-chol, who helped turn the national champion into a global star, resigned as chairman during the investigations that led to his conviction earlier this year for embezzlement and tax evasion. Following the Olympic "tradition", LEE Kun-hee also had to put his IOC membership on hold. This pardon allows him to vote and lobby more efficiently for the Pyeongchang case.

Of course, should Pyeongchang win, many will wonder what kind of lobbying was involved. The very year he became an IOC member (1996), LEE had been convicted for bribing former presidents Chun Doo-hwan and Roh Tae-woo. He was (already!) pardoned the following year and that's one of the reasons why his 2009 sentence was considered rather kind : "only" 3-year prison + 5-year probation + KRW 110 bn.

Of course, Samsung is a top olympic sponsor and it helps : everybody remembers the 1996 Coca Cola Games in Atlanta... And everybody knows Sochi owes its olympic status to one powerful man : Vladimir Putin. But summing up Pyeongchang 2018* to the Samsung Olympics or the LEE Kun-hee Games would be unfair. The whole country has been behind the project for a very long while, and after Vancouver 2010 and Sochi 2014, holding the games in Asia would make sense. The winning city will be declared in July 2011 and as much as 2018 rivals Annecy and Munich, Pyeongchang must watch competition from China for 2022.

Still, Pyeongchang looks like the perfect alibi for LEE Myung-bak who badly needed one to grant a second pardon to Korea's most powerful man. If the measure caused the usual popular indignation, it didn't really come as a surprise. And it probably didn't come for free either : rumors have it Samsung may be the chaebol recently evoqued as a major investor for the second-version-of-the-yet-to-be-built Sejong City**... both LEEs would then share each other's burden.

To make it more look like part of a grand scheme for Gangwon-do, the Government announced today a new Seoul-Chuncheon railway. After the Seoul-Chuncheon Expressway inaugurated last summer, an undisputable argument in favor of Pyeongchang 2018.


Seoul Village 2009

* official website : pyeongchang2018.org

** see "Sejong City and the beauty of lameduckhood"