The world is focusing on South Korea's smart factories

Gwang Hyun Ahn

Korea Smart Manufacturing Office

South Korea's smart factory initiative began in 2014 with the establishment of the Smart Factory Promotion Project Team under the Ministry of Trade, Industry and Energy. Later, in 2019, it was transferred to the Ministry of SMEs and Startups and reorganized as the 'Korea Smart Manufacturing Office,' overseeing all national smart factory projects. The foundation was laid by achieving the government-led goal of deploying 30,000 smart factories in 2022, and from 2023 onwards, the focus has shifted to further enhancement.

What allowed for such systematic policy execution? While government funding played a significant role, I would like to highlight South Korea's rich foundation in small and medium-sized manufacturing enterprises. For decades, these SMEs have served as primary, secondary, and tertiary suppliers to large corporations. They have contributed to the growth of these enterprises by adhering to stringent quality management and cost reduction demands. With the success of large corporations on the global stage, the growth of SMEs became intertwined. Recently, many global companies are knocking on the doors of Korean manufacturing enterprises to establish partnerships. In fact, a substantial number of Korean SMEs I visited were already engaged in transactions with global companies like Tesla. It's evident that the value of South Korea's SMEs in manufacturing is steadily increasing.

Even the German government, a pioneer in Industry 4.0, is visiting South Korea to benchmark its manufacturing DX (Digital Transformation) industry. The reason is, as mentioned earlier, South Korea's outstanding foundation in SME manufacturing. With global top-three automotive manufacturers and thousands of well-established SMEs beneath them, South Korea also boasts top-tier semiconductor companies. Similarly, the country is home to global leaders in battery production with well-trained SMEs. The shipbuilding and steel industries are also noteworthy. The German government's interest in South Korea's manufacturing DX industry stems from the well-known competitiveness of large Korean corporations and the multitude of 'well-organized' SMEs spanning various industrial sectors. Germany sees South Korea as the ideal country for testing its digital transformation efforts due to the strong presence of these SMEs across industries.

Now, with the announcement of the 'New Digital Manufacturing Innovation Strategy 2027' in September, South Korea is finally set to implement a strategy to establish autonomous factories by 2027. The global competitiveness of Korean SMEs is poised to extend vigorously into world markets on the massive wave of digital transformation.