Internet of Things
Report summary
Having topped the rankings for high-speed internet adoption and smartphone ownership, Korea is now racing towards integration of new telecommunication technologies such as 5G and the Internet of Things (IoT) into its economy. Thanks to the combined efforts of government, telecommunication companies and world-class electronics manufacturers like Samsung, Korea became the first country to roll out commercial 5G network and maintain the fastest download speed in the world. Even more remarkable is the fact that Korea has been entirely covered by LPWAN IoT networks since 2016, and now has fully-functioning nationwide IoT platforms in place – an exceptional feat.
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The Korean IoT market
The Korean IoT market is developing rapidly. It was estimated to be worth £6.7 billion in 2020 and has been growing at an annual rate of around 12.6%. By 2024, the market is expected to reach approximately £12 billion. The Korean government has been promoting IoT technologies and encouraging their integration into Korean cities and households, but despite these positive trends, there are challenges such as uncertain marketability, lack of technological and policy standardisation. This challenges were reflected in Korea’s global competitiveness figures, with Korea’s IoT technology ranking fourth in the world after US, Japan, and China.
Opportunity areas for UK companies
The growth of the Korean IoT market has created fertile ground for UK companies to engage with Korean firms. In terms of specific application areas for IoT products and services, there are opportunities in areas such as Smart City (such as smart transportation, smart resource management, smart healthcare and digital twin cities); Smart Factory (such as automation, efficiency and monitoring); and Smart Home (voice control, entertainment, security, etc.). In addition, IoT solutions designed to mitigate natural disasters and to aid in the upkeep and repair of civil infrastructure, such as those designed to monitor weather conditions or to detect cracks in buildings and bridges, are increasingly sought after.
Korean key players in IoT
While there is a strong foundation of small and medium-sized enterprises (SMEs) active in the sector, the three telecommunications giants, SK Telecom, KT and LG U+, dominate the ecosystem. SK Telecom was the first telecommunications company to develop an IoT-specific network, based on the LoRa Alliance standard, which was completed in 2016 and further 5G network in 2019. KT and LG U+ completed their NB-IoT and 5G networks shortly thereafter and, in an attempt to gain an edge over SK Telecom, formed an alliance to drive the adoption of the NB-IoT standard.
Government and IoT
The Korean government has taken an active lead in policy making related to industries included in the so-called ‘Fourth Industrial Revolution’, including IoT. It is important for overseas companies that seek to do business in Korea to pay careful attention to government-run projects as they can become a focal point for establishing priorities and the direction of research funds for firms in the private sector as well. In July 2020, the Korean government announced a £98 billion package of investments in economic, environmental and social reforms targeting digitalisation and green technologies, called the Korean New Deal. The Digital New Deal is the term used to describe projects aimed at the integration of digital technologies into the economy in which IoT plays a key role. As part of the Digital New Deal, the government earmarked £35 billion to accelerate the transition towards a digital economy, integration of IoT, 5G network and AI into the economy by 2024.
Market entry checklist
UK businesses looking to engage in a strategic partnership or introduce their technology or product into Korea should consider both business-related and cultural factors. 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?
- 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 through direct sales by appointing a partner or by setting up an office in Korea.
The Korean government and corporations are cooperating to experiment with 5G networks for smart cities and smart homes. The purpose is to demonstrate the efficiency and profitability of various services and applications on the 5G network.
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