Artificial Intelligence
Report summary
South Korea (Korea) offers many opportunities for UK artificial intelligence (AI) businesses, with the Korean government and many Korean conglomerates actively investing in AI-focused business processes, research and development (R&D) and start-ups. The country hosts a rapidly-developing AI market and a highly-developed ICT infrastructure which creates a solid foundation for UK businesses to test and introduce their AI technology. There is an awareness among the country’s tech community that the UK is a leader in the field of AI, so British companies with the right go-to-market strategy should find a warm reception among potential Korean customers and partners.
The Korean AI market
The AI industry in Korea has been developing at a remarkable pace for the last few years and has become a significant consideration across nearly every high-value industry. The AI market grew by more than 40% from £642 million in 2018 to £957m in 2019. Despite the Covid-19 pandemic that slowed some investments and delayed the implementation of new solutions since 2020, the market was valued at £1.7 billion in 2021 and is expected to reach a size of £6.7 billion by 2025.
Korea has been actively increasing the commercialisation of AI products and services in both domestic and international marketplaces, allowing the country to reduce the gap between more advanced nations faster.
Opportunity areas for UK companies
Korea's AI capability gap has created fertile ground for overseas AI companies to enter the market. Key opportunity areas for UK AI companies include autonomous vehicles (for example, V2X, ADAS solutions), digital healthcare (for example, precision medicine and smart diagnostics), AI-based financial services (for example, robo-advisors and fraud detection), smart factory solutions (for example, production optimisation and predictive maintenance), and AI assistants. Autonomous vehicles and digital health, for instance, represent good opportunities due to their high CAGR (41.1% and 15.4% respectively as of 2021) and their specific inclusion in government development plans.
Korean key players in AI
Large Korean conglomerates are investing heavily in AI research and increasingly taking equity stakes in AI firms. Samsung Electronics, the fourth largest investor in start-ups globally, has long recognised the importance of AI. The company currently operates a total of seven global AI centers in five countries - Korea, the UK, Canada, US and Russia, which allow the company to accelerate technology releases, as well as to recruit talented professionals in these strategically important markets. LG Group has formed a group-wide LG AI Research that secures AI original technologies and aims to nurture up to 1,000 AI experts by 2023 in order to massively expand AI expertise across its key sectors, such as home appliances, telecommunications, electronics, and bio.
Government and AI
The Moon Jae-In administration focused its efforts on AI by increasing investment in the area and creating business-friendly legislation.
In 2019, the government announced its National Strategy for Artificial Intelligence under the Digital New Deal initiative with the aim of creating a cooperative ecosystem and ensuring AI played a core role in the nation’s key infrastructure, namely defence, security, healthcare and industry.
In July 2021, the government revealed a revised investment plan under Korea New Deal 2.0 that covers three verticals: Digital New Deal, Green New Deal, and Human New Deal.
According to the Korean New Deal 2.0, a total of £30.3 million will be invested between 2021 and 2025 to strengthen the digitisation ecosystem and to activate the use of AI technology across all three deals.
Market entry checklist
UK businesses looking to engage in a strategic partnership or introduce their technology or product into Korea should take into account both business-related and cultural factors before setting out. These might include:
- Do we have a strong differentiator that sets us apart from our competitors in the market?
- Do we have a strong track record in other major markets?
- Are we willing to localise the product for the market and/or for local regulations, if necessary?
- Are we ready to provide a Proof of Concept (PoC) at little or no cost to the customer?
- How do we provide after-sales support?
UK businesses can approach the Korean market either through direct sales from the UK by appointing a partner or by setting up an office in Korea. With the right strategy and local support, Korea offers a vast array of opportunities for UK companies looking to expand overseas.
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