TECH TALK: Tech’s 10X Tsunamis: The East (Part 2)

The Korean Miracle

Wired writes about the bandwidth revolution that has made South Korea a world leader (August 2002):

Something that sets Seoul apart and fosters its passion for broadband: online game rooms, or PC bangs, as they are called here. There are 26,000 of them, tucked into every spare sliver of real estate. Filled with late-model PCs packed tightly into rows, these rabbit warrens of high-bandwidth connectivity are where young adults gather to play games, video-chat, hang out, and hook up.

As elsewhere, technology scratches a cultural itch. It is the social infrastructure, as much as the hardware and software infrastructure, that’s driving the statistics.

And the numbers are impressive South Korea has the highest per capita broadband penetration in the world. Slightly more than half of its households have high-bandwidth connections, compared to less than 10 percent in the US. The growth in broadband has surged in the last three years from a few hundred thousand subscribers to 8.5 million.

South Korea is the perfect example of how a nation used technology to ride its way out of crisis. Writes the Far Eastern Economic Review (July 18, 2002):

Embraced as the saviour of Korea’s crisis-hit economy four years ago, IT has swept through every sector, from industry to education and politics, creating new jobs, shaking up old ways of doing business and prompting social change. How it plays out will provide a road map for other emerging countries on the same journey up the value chain to a level of innovation that China’s low-cost workers can’t match.

“Korea is becoming an Asian leader. We’ve really leapfrogged Japan,” says Michael Kim, the Korea-based president of U.S. private equity firm The Carlyle Group’s Asian operations.

Where is technology taking Korea? Consider the facts. Every day in the month of April a new e-commerce Web site went on-line. The market leader,, sells more goods in one day than six real-world department stores. Three out of four teens prefer to play on-line games than watch television. “That’s real usage,” says Ed Graham, head of Sun Microsystems in Korea. It’s also real jobs, which are being created in the tech sector three times faster than anywhere else.

NCSoft’s Lineage video game is the No. 1 seller in Taiwan, and NCsoft is moving into China and Japan. Sony and Microsoft are scrambling to catch up.

In any case Korea’s love affair with technology is about more that just the Internet. Computer chips still dominate tech exports, but more value-added gadgetry is catching up. One in five mobile handsets worldwide and nearly half the flat-screen monitors used in the latest TVs and computers are made in Korea. IT is the fastest growing sector of the economy. Its share of GDP is the highest of any industrialized country at 13%. Exports totalled nearly $40 billion last year, a quarter of total shipments.

Business Week (July 10, 2002) provides the background to the Korean success story:

This country of 48 million has become a model for developing nations everywhere. Nowhere is this more true than in its home region, where Japan is a waning force and much of Southeast Asia continues to struggle with sick banking systems and dwindling foreign investment. The commentators may be right that the future belongs to China–and that Korea itself still needs to keep reforming. But Korea has already made the transition from authoritarianism to democracy and from a low-end, exporting economy sealed off from the world to one that is plugged-in, dynamic, and increasingly high-tech. It will be some time before China gets there.

How did South Korea transform itself? Answers Business Week: “First, President Kim Dae Jung and his advisers managed to cut the connection between Korea’s banks and the chaebol, the conglomerates that once ruled Korea. Second, the Koreans created an economy that did not depend exclusively on exports to survive. They fashioned a full-fledged domestic economy, a rare thing in Asia. Third, the trauma of crisis and change unleashed a wave of innovation in business and culture that is still in effect.”

South Korea combined Vision, Will and Technology. This is the combination that is needed for the Eastern countries to create the 10X force that can transmogrify themselves first, and then the rest of the world.

Tomorrow: The East (continued)

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Rajesh Jain

An Entrepreneur based in Mumbai, India.