Korea’s Emerging Sharing Economy 

‘So do you like dog?’ I’m sure my face was frozen with uncertainty as I looked at my host Sun, who sat next to me in the taxi. ‘I’ve never actually, um, tried dog…’, I said carefully. ‘Oh!’ she squealed, ‘Duck, not dog!’ We both fell back in to our seats with laughter at the miscommunication, and I knew that tonight’s experience was going to be a fun one.

I was in Seoul to speak at the Chosun Biz’s Smart Cloud Show on what is happening around the world in Collaborative Consumption. On the trip I wanted to experience first hand many emerging examples in the sharing economy space in Korea right now and meet the people who are driving the movement on the ground. 

The stage at Chosun Biz Smart Cloud Show

On my first night, I was on my way to an event hosted by PlayPlanet, Korea’s authentic experience marketplace, founded by Sun Mi Seo. From the moment we arrived at our destination, I knew this is an experience I would never have been able to have without the help of Sun and her friend Flora. We dined at a quaint gallery café in Buam-dong run by Flora and her mother, who prepared a special meal of Roast Duck Dupbob and delicious salads (of course with a side of kim chi!). It was a get-together of eight young Koreans who are passionate about social innovation and Collaborative Consumption. Following dinner and a lively conversation, we took a walk through the alleys of Buam-dong in the (thankfully) cooler night air to the hill where the Korean poet Yun Dong-Ju used to write his prose, overlooking the city and the famous Namsan Tower landmark, where we enjoyed makgeoli (Korean rice wine) and its accompanying buchimgae (Korean ‘pizza’ with seafood). I was beyond satisfied with food, fun and lovely conversation by the time the evening came to an end and the memory of this unique opportunity to see a hidden side of Seoul will remain with me for a long time.

While Collaborative Consumption is not familiar to many people in Korea, there is a real interest in the opportunity the space offers, and certainly the enthusiasm of the many founders is both addictive and inspiring. After my presentation at Smart Cloud, I visited the exhibition hall, an amazing tradeshow of the companies involved. In one corner was a cluster of around 10 ‘Sharing Economy’ exhibitors. While we have spent a lot of the last few years travelling the world and meeting with many different founders and entrepreneurs, seeing a group all together in one place makes hit home that Collaborative Consumption is truly spreading and thriving in such different cultures.

Lauren meeting with a group of Korean entrepreneurs at the Smart Cloud Show Sharing Economy exhibition

From examples like OpenCloset (clothes swapping), MyRealTrip (experience marketplace) and Wonderlend (‘stuff’ rental), to peer-to-peer accommodation siteBnbHero, Bookoob lending library and Kiple, children’s clothes swapping - it’s clear Collaborative Consumption entrepreneurs in Korea are exploring every vertical. One unique concept emerging, however, is a unique take on typical p2p accommodation called Kozaza, which specialises in matching visitors with a traditional Korean hanok homestay. I was lucky enough to spend my last night in Seoul in a Kozaza hanok in the beautiful area of Bukchon, which is known for this type of accommodation. Arriving at the hanok, I was greeted by a sweet elderly couple, whoshowed me to my (delightfully airconditioned!) room at the back of the complex. I was given a surprisingly comfy floor mattress and pillow and was left to settle in to my new abode.

The traditional Korean hanok rented through Kozaza

That evening I tried a social dining experience with Zipbob! Launched just two months ago by passionate and effervescent founder Lynn Park, Zipbob has already hosted 70 shared dining events at different local cafes, bringing together more than 700 people over a specific discussion topic. In fact, it was reading Rachel Botsman’s book ‘We Generation’ (which is the title of What’s Mine Is Yours in Korean) that motivated Lynn to quit her role in management consulting and do something different with her life.

Tonight’s menu of conversation was of naturally Collaborative Consumption, and I was greeted by 12 enthusiastic people who are each making their own contribution to the area, including the founders of HelloMarket, Korea’s Craigslist disruptor, and the wonderful Korean correspondent Ejang, who runs coworking space and Collaborative Consumption incubator, Co-up. As my first ‘social dining’ experience, I assumed it would be quite similar to going to a dinner party of strangers, or meeting some friends of friends, but there is certainly a different energy involved when people meet to make new connections over a shared interest - no awkward silences, no boring stories, just valuable new networks being built. It’s clear this is a model which will continue to grow around the world as people look for new ways to build offline connections through online platforms, improving on the original MeetUp model with more intimate gatherings and clearer focus of discussion and outcomes.

A bottle of traditional Korean rice wine, or makgeoli

The next morning, I awoke after a comfortable night’s sleep at the hanok and ventured into the kitchen to my host preparing me a hot breakfast of eggs and toast - perhaps my first meal without kim chi in a few days! It was my third and final day in Korea, but already it felt like I had been there a week with the people I had met and the experiences I had. 
On the last day, I was fortunate enough to be invited to meet Seoul’s Vice Mayor for Political Affairs, Mr Kim Hyeong-Joo, to discuss Seoul’s interest in becoming a sharing city. It is so exciting to see Metropolitan Governments around the world taking an interest in building the profile and uptake of Collaborative Consumption in their city, and Seoul is no different with the support of Mr Kim and his team behind him.

After observing and documenting the growing trend the world over the last few years, I am particularly excited by what is occurring in South Korea and think that it has the makings of a Collaborative Consumption super region. While many of the start-ups in the country are following similar models to other companies globally, their uniqueness comes in the nuances of their culture, which has a long and engrained history of sharing. A combination of the government’s intention to support start-ups, the determination and passion of the entrepreneurs to see these ideas take hold and a large tech-savvy population creates a perfect mix for this sharing economy melting pot; one we will be watching and supporting closely.

Korea Needs to Groom More Top Scientists and Engineers

Aggressive efforts by many nations to recruit science and technology talent have put the spotlight on Korea’s own workforce. New industries like green energy, robotics, biomedicine, and nanotechnology will require highly skilled personnel, but Korea is coming up short in these promising areas. New initiatives like Korea’s “10,000 Plus Plan,” and investments in basic research are trying to address these gaps.

Developing new growth engines is an urgent priority for economies around the world. This is prompting more attention to grooming and acquiring elite science and technology (S&T) personnel. Advanced countries and emerging economies alike are mounting efforts to foster personnel that can lead the next-generation growth engines of their economy.

Technology powerhouses, including Japan and Germany, have emphasized home-grown talent. In Germany, the “High-Tech Strategy (Die Hightech-Strategie fur Deutschand)”¹ adopted in 2005 seeks to nurture expertise in 17 emerging high-tech industries, including space technology and energy. In contrast, the US and Singapore are investing in attracting top-tier foreign talent. The “American Competitiveness Initiative”² focuses on promoting high-risk, high-return research and expanding the labor pool for research and development (R&D).

More recently, China, a new tech-power, has been attracting top-level R&D personnel from overseas. Along with India, China is employing a two-track approach—using both overseas recruiting and strengthened domestic education and training.

Korea is shifting its hiring of S&T personnel from leaders who can drive a “catch-up” business model to leaders who can pursue a “frontier” strategy that leverages next-generation industries. Through this, Korea hopes to stay ahead of emerging market rivals like China on the value chain, while catching up with existing technology powerhouses.

Samsung Economic Research Institute (SERI) selected nine emerging industries for Korea through a meta-analysis of core convergence technologies and applied areas, and subsequently Korea’s technology and human resource competitiveness in these industries. The industries chosen are: green energy, environmental technology, transportation and exploration, high-tech cities, information and communications technology (ICT), robotics, new nanomaterials, biomedicine and high value-added food products.

In these nine industries, Korea was found to be markedly weak in both technology and human resources compared with advanced countries. Workforce competitiveness in human resources was particularly low, suggesting a shortage of skilled personnel. This was visible in all of the industries (except for high value-added food). The technological competitiveness of promising industries was just 57 percent of that of advanced countries, with workforce competitiveness at 55 percent. The difference was especially pronounced in ICT, green energy and environmental technology. Technological competitiveness in the transportation and exploration industry was particularly weak, at only 51 percent of advanced countries. Environmental technology, biomedical science and high value-added food also fell short in technological capacity.

SERI’s analysis forecasts a chronic human resources problem in these industries, amounting to a shortfall of 10,000 workers a year up to 2020.³ At the current pace, the shortfall will be 3,000 per year until 2013, with environmental technology, high-tech cities and ICT affected the most. These three industries will require a supply of 1,400 personnel. Thereafter, the shortfall will reach 10,000 per year from 2014 through 2020 with ICT needing 1,300 people, new nanomaterials needing 1,200 people and biomedical science needing 1,400 people.

Next-generation industries require employees with post-graduate education in basic science and engineering. Basic science, including math, physics, biology and chemistry will be critical because it constitutes the core of the nine emerging industries. Basic engineering, including electrical, electronic, computing, and communications engineering, is the foundation of convergence technologies.

Korea’s current higher education system cannot meet the demand for basic science and engineering graduates. In particular, biomedicine, ICT and new nanomaterials, expected to grow 22.3 percent, 28.7 percent and 27.6 percent a year respectively by 2018⁴, are likely to face a severe shortage of labor due to the lack of degree holders in biochemistry, electrics, electronics and materials.

The projected shortage in highly educated S&T personnel calls for a national plan to annually add 10,000 workers with post-graduate degrees for the next decade. The plan should be based on four basic principles. First, creative S&T personnel should be fostered at the post-graduate level in fields closely related with next-generation industries. Second, basic research capability should be upgraded to take a technological lead. Third, an institutional foundation needs to be established to ensure consistency in research and talent management policies. Last, in addition to internal development, overseas scouting should be encouraged.

First, Ph.D. and Master’s degree work in electricity/electronics, machinery/metals and chemical engineering should be fostered at a select number of graduate schools and research institutions with outstanding R&D capability. This would be a departure from the current Korean approach of spreading support across many universities and institutions. The education system should be improved to keep the curriculum updated and relevant to industrial fields, while support for developing new subjects and teaching-learning methods should be expanded. Interdisciplinary courses can help foster talent with diverse academic backgrounds. Moreover, government support should be provided so that government-funded research institutions use their own R&D capability to nurture post-graduates.

Investment in basic, source and converged technologies based on information technology, biotechnology and nanotechnology should be expanded. Investment should be directed into university labs for state-of-the-art equipment and facilities, and government support should be channeled into research groups. An increase in research funding and scholarships will provide a stable environment for talent in basic science fields to focus on their research. Incentives will also be necessary to encourage young talent to go onto advanced courses. In line with this, fast-track programs in basic science and technology that allow promising students to rapidly acquire doctoral degrees need to be introduced.

At present, several government agencies are involved in S&T personnel development policies. However, the central function of coordinating and integrating relevant policies is still immature, which creates overlapping investments and inefficient budget execution. To tackle this problem, a government-wide coordination and management function should be created to set directions for and assess S&T development programs and research investment in promising industries.

In the past, Korea had a short-term approach to recruiting skilled Koreans expatriates, which exacerbated brain drain. This needs to be changed to long-term, regular programs to attract world-class Korean scientists. In addition, inviting foreign scholars needs to be given greater attention. Research institutions should help attach Korean personnel to invited scholars to elevate the long-term quality of local research. Attracting prestigious research institutions overseas can be pursued as well. Their projects and businesses must undergo rigorous performance evaluations to maximize benefits to the society. For this, the government should monitor their performance and provide necessary support through a dedicated agency. Immigration policy should grant permanent residency to facilitate overseas recruiting.

Korea has experienced great success in catching up with advanced economies by deploying universal basic education, taking on established industries, and making massive investments in physical infrastructure. Unlike the past, however, Korea’s future now depends on investment in its intellectual infrastructure, i.e. its most highly skilled people. The next chapter of Korea’s development will depend on the choices it makes in pursuing emerging industries and developing its science and technology talent, as it shifts from “catching up” to a “leadership” role in the global economy.

BAE Seong-O is research fellow at SERI. His research focuses on strategic human resources, human capital and human resources management. He holds a PhD in Human Resources Development from University of Minnesota. Contact: seongo.bae@ samsung.com

1. BMBF (2009). The High-Tech Strategy for Germany.

2. AAAS (2011). Policy for Science, Technology, & Innovation in the Obama Administration: A Mid-Course Update.

3. Estimates are based on the Korea Employment Information Service’s Mid- to Long-term Outlook for Labor Supply and Demand for the demand side and the Korean Education Development Institute’s 2010 Statistics on Graduates from Higher Education Courses for the supply side.

4. Estimates are based on the “Vision and Development Strategy for New Growth Engines” by the National Science & Technology Commission (2009).

A South Korea financial regulator has started an investigation into alleged interest rate rigging by some of the country’s banks.

The Fair Trade Commission is looking at possible collusion over setting certificates of deposit (CD), used as a benchmark to set lending rates.

Kookmin, Shinhan, Woori, and Hana are the banks being investigated.

It follows the Libor-rigging scandal involving Barclays and possibly several other banks.

Brokerage firms, which report CD rates twice a day, are also under suspicion. A CD is a way of saving with a fixed interest rate and maturity sold by banks and circulated in the secondary market by brokerages.

Financial firms benefit from a high CD rates as many household loans are linked to them. They are frequently used to help South Korean’s buy homes.

As with the manipulation of the Libor inter-bank rate in the UK, the possible rigging of CD can help flatter companies’ financial health.

Fine threat

The indebtedness of South Koreans has become a particular worry to the authorities as the economy slows.

In June, ratings agency Moody’s said household loans had grown “at an alarming rate” and were vulnerable to financial shocks arising from the global economic downturn.

“If the investigation finds collusion, there will be significant fines. Even if there was no collusion, it’s highly likely that the government’s motive behind the investigation is to lower household lending rates by inducing a fall in CD rates,” said Taurus Investment analyst Andy Lee said in a research report.

Shares in all four banks being investigated fell by more than 2%, with Hana down 2.7%. The banks confirmed they were under suspicion, but declined to comment further.

The investigation comes after a series of scandals to hit the banking industry, including a £290m fine for Barclays over Libor-fixing, severe criticism of HSBC over money laundering, and surprise losses at JP Morgan which have triggered a US federal inquiry.

The Reuters news agency reported that there were no indications that any foreign-based financial firms had been implicated in the South Korean investigation.

The Organization for Economic Cooperation and Development, the rich countries’ club based in Paris, released its harmonized unemployment rates for the 34 most developed countries. In May, unemployment stayed flat at 7.9% across the member countries. This puts America’s unemployment rate of 8.2% a bit above average for peer countries. On Friday, the unemployment rate for June hit the wires, along with a rate of hiring that barely keeps up with the growth of the workforce. That report really hammered the Dow (^DJI) and S&P 500 (SPY). 

Only eight of America’s peer countries are dealing with higher unemployment rates. The highest is Spain’s rate at 24.6%. The European Union as a whole is at 10.3% and the eurozone has 11.1% unemployment. For most countries, the rate is rising, but there are a few countries on the list that are actually seeing unemployment decline. 

Iceland, Canada, Japan, and Norway all saw unemployment clear up considerably since the year began. The lowest unemployment rate is in Korea where only 3.2% of the active population is looking for a job. Japan is the second lowest with 4.4% unemployment.

Youth unemployment is where things get really ugly. The jobless rate for 15-to-20-year-olds is over 20% in 10 countries. It is worst in Spain where more than half of the workers in this category are without jobs. 

Twitter: @vincent_trivett

Read more: http://www.minyanville.com/business-news/the-economy/articles/unemployment-rate-oecd-jobs-global-economy/7/10/2012/id/42305#ixzz20GyJOiDY