Korea's Robotics Sector: Strategic Guidance for Global Investors
The shifting global landscape has brought South Korea's Robotics industry into sharp focus as a hub of innovation and potential growth. This article aims to delve deep into the Korean Robotics sector, providing compelling insights into why South Korea stands out as a prime investment destination in the dynamic realm of robotics. This advanced industry boasts revolutionary features like connectivity, intelligence, and interaction, which have sparked a digital transformation across various sectors. Additionally, the merging of manufacturing robots with AI, cloud technology, and the rising prominence of service robots, especially in response to the post-COVID-19 surge in non-face-to-face service markets, underlines the industry's versatility in addressing societal concerns such as welfare, safety, and logistics.
Analyzing the Korean Robotics Industry
South Korea's Robotics industry epitomizes a high-tech, forward-thinking sector characterized by its intricate fusion of connectivity, intelligence, and interaction. This blend serves as a catalyst for the digital transformation of multiple industries, paving the way for innovative businesses and enhanced value propositions.
The incorporation of AI, cloud technology, and advanced manufacturing processes in South Korea's Robotics sector heralds a new era of sophisticated and intelligent robotics. This innovation drives the modernization of manufacturing practices, fostering increased productivity and raising the bar for intelligent production standards.
While the manufacturing sector reaps the benefits of this progress, service robots are swiftly gaining traction, responding to the heightened demand for non-face-to-face services following the COVID-19 pandemic. This surge underscores the relevance of robots in addressing societal issues like welfare, safety, and logistics.
Furthermore, the Robotics industry seamlessly integrates with other sectors but requires significant technological expertise, resulting in substantial entry barriers. As a result, the industry has evolved into an oligopoly market, with major players, including China, Japan, the United States, Germany, and South Korea, collectively commanding a 73% share of the global market.
In the realm of manufacturing robots, South Korea, despite entering the scene later than its Japanese and European counterparts, competes admirably by prioritizing collaborative robotics. By strategically merging AI and autonomous driving technologies, South Korea has expanded the application areas, rapidly narrowing the gap and asserting its presence in this competitive field.
In summary, the Korean Robotics industry is dynamically evolving, embracing innovation, sophistication, and adaptability as its guiding principles.
Exploring the Future of the Korean Robotics Sector
The Korean Robotics industry is poised for significant growth and expansion on the global stage, with both its manufacturing and service segments making notable strides, reflecting a consistent trend expected to continue.
Globally, the robotics market, valued at $24.3 billion in 2020 ($13.2 billion for manufacturing robots and $11.1 billion for service robots), has demonstrated impressive growth rates in recent years. Manufacturing robots saw an 8.5% increase, while service robots surged by 10.2% from 2015 to 2020. Forecasts suggest further escalation, with the global manufacturing robot market projected to reach $17.9 billion by 2024 and the service robot market to grow to $16.2 billion (World Robotics 2021, IFR).
Domestically, South Korea's robotics industry has shown steady growth, with sales reaching approximately 5.5 trillion KRW in 2020, representing an average annual growth of 5.4% from 2015 to 2020. Forecasts anticipate a substantial uptick, projecting figures of 6.7 trillion KRW by 2024. The manufacturing segment is expected to grow by 2.1%, service robotics by 6.4%, and robot parts by 11.7%.
To support this growth trajectory, the Ministry of Industry has introduced strategic policies aimed at nurturing the robotics industry. The formulation of the 3rd Basic Plan for Intelligent Robots ('19~'23) underscores the government's commitment to positioning the country among the top four global powers in robotics. This initiative aims to achieve a domestic robot market size of 15 trillion KRW by '23, distribute 700,000 units of manufacturing robots, and foster at least 20 specialized companies with annual sales exceeding 100 billion KRW.
References: KIRIA, Invest Korea
Benefits of Investing in the Korean Robotics Sector
The Korean Robotics industry offers a multitude of advantages, making it an attractive destination for investors and entrepreneurs aiming to capitalize on the vast opportunities within this dynamic field. South Korea's strengths across various dimensions contribute to its appeal as a prime investment hub in the robotics sector.
1. Robust Ecosystem of Related Industries
With its manufacturing sector accounting for 25.4% of the GDP in 2020, South Korea holds the second position globally. This strong industrial foundation fosters innovation and technological advancements, providing a strategic platform for the growth of the robotics industry.
2. Abundance of Skilled Human Resources
South Korea boasts a significant pool of human resources, ranking first globally with 16.6 researchers per 1,000 economically active individuals in 2020. This surplus of skilled researchers underscores the country's commitment to research and technological progress, creating an environment conducive to innovation within the robotics sector.
3. Diverse Incentives for Investment
The Korean government offers various incentives to attract and support investors, including tax relief, cash support, and location-based assistance. These incentives aim to alleviate financial burdens and foster a supportive environment for investors venturing into the robotics industry in South Korea.
4. Government Backing for Industry Development
The government actively supports and nurtures the robotics industry, with 11 regions designated as specialized organizations for robotics businesses and projects. This commitment to fostering innovation and advancement within the industry is evident in the government's initiatives and policies.
5. Extensive Free Trade Agreement Territory
South Korea's vast Free Trade Agreement (FTA) network, comprising agreements with 59 countries as of '22 and ongoing negotiations with over 10 countries, provides a significant advantage for investors. This extensive network facilitates global expansion opportunities, creating a favorable environment for the import and export of robotics technology and products.
These combined advantages position South Korea as an attractive and supportive destination for investors looking to establish a strong presence in the dynamic and evolving robotics industry.
Guiding Global Investors and Entrepreneurs Strategically
1. Forge Strategic Partnerships and Collaborations: Establishing partnerships and collaborations with local Korean companies or research institutions is a proven strategy for success in the Korean Robotics industry. These collaborations offer access to shared expertise, insights into the local market, and the ability to tailor products to meet specific consumer demands. South Korea's emphasis on collaborative robots, as highlighted in the World Robotics 2021 report, presents opportunities for foreign investors to tap into unique expertise and cultural insights, potentially accelerating market penetration.
2. Harness Governmental Support and Incentives: Taking advantage of the support and incentives provided by the South Korean government can significantly impact the success of foreign investors. The government has actively supported the robotics industry through initiatives like tax relief, cash support, and specialized organizational structures. These incentives have played a vital role in fostering industry growth, as evidenced by the government's ambitious targets outlined in the Robotics Industry Survey. Aligning business strategies with government initiatives can be advantageous for investors aiming to establish themselves in the Korean robotics market.
Conclusion
South Korea's Robotics industry stands as a beacon of innovation and growth on the global stage. This article delved into the sector, highlighting South Korea's pivotal role and the investment potential within the dynamic realm of robotics. The industry's advanced features, such as connectivity and intelligent technologies, address societal concerns, underscoring its significance.
For global investors, South Korea's Robotics industry offers a promising arena. Its strategic ecosystem, skilled workforce, governmental support, and extensive FTA network affirm its attractiveness. Pearson & Partners, a consulting firm specializing in facilitating expansion into Korea, offers incorporation and tax accounting services. Reach out to us for strategic guidance in navigating Korea's Robotics industry landscape.
