SKorea fosters startups as it seeks economic shift

May 30, 2013 by Youkyung Lee
In this Tuesday, May 14, 2013 photo, from left, Ecube Labs CEO Kwon Sunbeom, his co-founders Lee Seungjae and Kwon Hyungsuk pose with their product, a solar energy-powered garbage bin, at their office in Seoul, South Korea. Instead while his peers were seeking jobs at Samsung and LG, Kwon Sunbeom scaled back his studies and started the company with friends. Together they invented the garbage bin that compresses rubbish using solar power and wirelessly communicates to be collected when full. Using 50 million won ($44,000) of their own money and channeling the business in a garage spirit that made Silicon Valley famous, they lived for a month in a shabby factory without air conditioning, subsisting on instant noodles, to make their first prototype. So far they have sold 31 of their "Smart Bins" to universities in Seoul and another 12 to Saudi Arabia and the United Arab Emirates. (AP Photo/Ahn Young-joon)

Kwon Sunbeom's future was mapped out. Talented in math and science, he attended a specialized high school and majored in electronic engineering at a prestigious university. Lifetime employment at one of South Korea's towering conglomerates beckoned.

Instead, while his peers were seeking jobs at Samsung and LG, he scaled back his studies and started a company with friends. Together they invented a garbage bin that compresses rubbish using solar power and wirelessly communicates to be collected when full.

Using 50 million won ($44,000) of their own money and channeling the business in a garage spirit that made famous, they lived for a month in a shabby factory without air conditioning, subsisting on instant noodles, to make their first prototype. So far they have sold 31 of their "Smart Bins" to universities in Seoul and another 12 to Saudi Arabia and the .

"I saw a garbage bin overflowing with trash in the street one day and thought someone should press them down," said Kwon. "Because there was no one, I thought it should be done by a machine. And because it was located outside, I thought it can use the solar energy as a power source."

Kwon, 25, is the kind of risk taker South Korea's government says it wants to cultivate as it reckons with diminishing returns from years of reliance on state-favored companies known more for their massive scale and aggressive competitive instincts than bold thinking and creativity.

The chaebol, as the conglomerates are known, helped transform South Korea into a wealthy industrialized powerhouse but are increasingly criticized as part of a fraying economic setup based on copycatting innovations from abroad. South Korea is also casting a nervous eye at up-and-coming Chinese companies such as Lenovo and ZTE that aspire to beat South Korean companies at their own game.

Since taking office in February, President Park Geun-hye has held up Steve Jobs and as examples of the talent that South Korea needs to foster.

In this Tuesday, May 14, 2013 photo, Ecube Labs CEO Kwon Sunbeom, left, poses with his co-founders Kwon Hyungsuk and Lee Seungjae for a photo at their office in Seoul, South Korea. Instead while his peers were seeking jobs at Samsung and LG, Kwon Sunbeom scaled back his studies and started the company with friends. Together they invented a garbage bin that compresses rubbish using solar power and wirelessly communicates to be collected when full. Using 50 million won ($44,000) of their own money and channeling the business in a garage spirit that made Silicon Valley famous, they lived for a month in a shabby factory without air conditioning, subsisting on instant noodles, to make their first prototype. So far they have sold 31 of their "Smart Bins" to universities in Seoul and another 12 to Saudi Arabia and the United Arab Emirates. (AP Photo/Ahn Young-joon)

Among the policies aimed at nurturing a "creative economy," South Korea is pouring more than 3 trillion won ($2.7 billion) into funding startups, establishing a third stock market to help new ventures raise money, and changing laws to lower hurdles for crowd-funding. To increase the chances of a financial payoff for entrepreneurs, it plans to give tax breaks and other incentives to big companies that invest in startups.

"We feel the limits of the economic strategy that led our economy in the past," said Choi Soon Hong, Park's adviser on future strategies, at a briefing earlier this month. "From the past growth model based on imitation and catching up, we have to change the growth model based on creativity and leading."

The lofty aspirations are set against cultural values that inhibit risk taking: an emphasis on respecting seniority and hierarchy, long working hours meant to demonstrate loyalty to company and intense pressure for the young to succeed at school and college.

"Honestly, school is absolutely not helpful," said Kwon, who while running Ecube Labs is paying full tuition and doing the minimum course work required to graduate. "If it were like the U.S., I would have dropped out. But in South Korea people still ask which school I went to."

In this Friday, May 24, 2013 photo, a student throws trash into a solar energy-powered garbage bin created by Ecube Labs CEO Kwon Sunbeom at the Yonsei University in Seoul, South Korea. Instead, while his peers were seeking jobs at Samsung and LG, Kwon scaled back his studies and started a company with friends. Together they invented a garbage bin that compresses rubbish using solar power and wirelessly communicates to be collected when full. Using 50 million won ($44,000) of their own money and channeling the business in a garage spirit that made Silicon Valley famous, they lived for a month in a shabby factory without air conditioning, subsisting on instant noodles, to make their first prototype. So far they have sold 31 of their "Smart Bins" to universities in Seoul and another 12 to Saudi Arabia and the United Arab Emirates. (AP Photo/Ahn Young-joon)

"Sometimes I feel like I'm in a dilemma. When I'm in school, I think about work."

Still, there is no shortage of belief in South Korea that it can bring about another transformation. After fighting in the 1950-53 Korean War ended in a truce, the South's economy was in ruins. Within a generation it was emerging as one of Asia's most dynamic nations.

Park, the current president who wants to inspire original thinking, is the daughter of dictator Park Chung-hee who championed rapid industrialization and the rigid, efficiency-at-any-cost culture of the conglomerates.

Added impetus for change has come from a U.S. court's stinging rebuke in 2011 of Samsung Electronics Co., the flagship of the Samsung empire, for infringing Apple Inc.'s intellectual property. Although a federal judge reduced the $1 billion fine that a California jury imposed on Samsung for copying Apple's iPhone and iPad, the verdict was a reminder for South Korea that the success of its biggest company was built on the innovations of others.

In this Friday, May 24, 2013 photo, a student throws trash into a solar energy-powered garbage bin made by Ecube Labs CEO Kwon Sunbeom at the Yonsei University in Seoul, South Korea. Instead, while his peers were seeking jobs at Samsung and LG, Kwon scaled back his studies and started a company with friends. Together they invented a garbage bin that compresses rubbish using solar power and wirelessly communicates to be collected when full. Using 50 million won ($44,000) of their own money and channeling the business in a garage spirit that made Silicon Valley famous, they lived for a month in a shabby factory without air conditioning, subsisting on instant noodles, to make their first prototype. So far they have sold 31 of their "Smart Bins" to universities in Seoul and another 12 to Saudi Arabia and the United Arab Emirates. (AP Photo/Ahn Young-joon)

"Samsung is the world best in producing goods or services that others make at cheaper costs and differentiating them by adding new features," said Song Jaeyong, a professor at Seoul National University who has served as an external advisor for Samsung since 2004. "But it had not made what doesn't exist in the world, like Apple did."

"Samsung's culture is a culture of hierarchy, a culture that emphasizes efficiency, which was great for enhancing competitiveness in manufacturing," said Song. "But for creative innovation, it is important to have diversity, openness, flexibility, open communication and an attitude of learning from failures. Samsung's corporate culture lacks these qualities."

After the California verdict, Samsung began experimenting.

In December it began a project, dubbed Creative Labs, which seeking to emulate a startup ethos, allows some employees to take 6 months to a year off their regular work to collaborate on projects that no deadlines, profit targets or rigorous management rules.

Ki Yuhoon, a low-ranking engineer in Samsung's semiconductor division, can hardly believe she is now leading a team that includes a designer, a developer, and a marketer who are all older and more experienced.

In this photo taken on Thursday, May 16, 2013, Ki Yuhoon, an engineer in Samsung's semiconductor division, shows off a prototype movie projector at Samsung Creative Labs in Seoul, South Korea. In December Samsung began a project, dubbed Creative Labs, which seeking to emulate a startup ethos, allows some employees to take 6 months to a year off their regular work to collaborate on projects that no deadlines, profit targets or rigorous management rules. Ki can hardly believe she is now leading a team that includes a designer, a developer, and a marketer who are all older and more experienced. (AP Photo/Lee Jin-man)

"Because I have a control over the entire project, I can try anything I want," said Ki, who has moved from a typically drab Samsung office to an open plan space in Seoul's ritzy Gangnam district that is decked out with bare concrete walls, high ceilings and colorful chairs and couches.

In her usual job, she could not see the outcomes of her work for customers, but this summer she is visiting the Congo to test a prototype movie projector made with used handset screens. The goal is to figure out how to make a portable movie projector using materials readily available in the country, she said.

But it is baby steps for Samsung and there's no suggestion of changing its overall culture.

Creative Labs "will stay outside the system," said spokesman Kim Deuggeun.

Explore further: Why the Sony hack isn't big news in Japan

5 /5 (1 vote)
add to favorites email to friend print save as pdf

Related Stories

Japan court rejects Samsung claim against Apple

Feb 28, 2013

A Japanese court Thursday rejected a claim by Samsung that Apple stole its technology, in the latest round of a global legal battle between the smartphone giants over patents.

Samsung promotes chairman's son to vice chairman

Dec 05, 2012

Samsung Electronics Co. promoted its chairman's only son to vice chairman, putting the 44-year-old closer to the top leadership position at the world's largest maker of memory chips, mobile phones and TVs.

Samsung plans to add iPhone 5 to patent war

Sep 21, 2012

South Korea's Samsung Electronics said Friday it was considering adding Apple's new iPhone 5 to a patent infringement case as part of a long-running global legal battle between the rival smartphone giants.

Samsung chairman keeps fortune in inheritance case

Feb 01, 2013

The chairman of Samsung Electronics has kept his fortune and control of the Samsung conglomerate after a South Korean court Friday ruled against his older brother in an inheritance battle.

Apple files fresh lawsuit against Samsung

Jun 24, 2011

US technology giant Apple said Friday it has filed a lawsuit in South Korea claiming Samsung Electronics copied its products, in the latest round of an international legal battle between the pair.

LG seeks ban on Samsung tablet sales in Korea

Dec 28, 2012

South Korea's LG Display said on Friday it had asked a Seoul court to ban the domestic sale of Samsung's Galaxy Note 10.1 tablet computer, citing alleged patent infringements.

Recommended for you

China's Xiaomi raises more than $1 bn in funding

5 hours ago

China's top smartphone seller Xiaomi Corp. is raising more than $1 billion in a fresh round of funding, a move which would raise its valuation above $45 billion, a report said Sunday.

Why the Sony hack isn't big news in Japan

Dec 20, 2014

Japan's biggest newspaper, Yomiuri Shimbun, featured a story about Sony Corp. on its website Friday. It wasn't about hacking. It was about the company's struggling tablet business.

Sony faces 4th ex-employee lawsuit over hack

Dec 20, 2014

A former director of technology for Sony Pictures Entertainment has sued the company over the data breach that resulted in the online posting of his private financial and personal information.

Sony tells AFP it still plans movie release

Dec 20, 2014

Sony Pictures boss Michael Lynton denied Friday the Hollywood studio has "caved" by canceling the release of "The Interview," and said it still hoped to release the controversial film.

2012 movie massacre hung over 'Interview' decision

Dec 19, 2014

When a group claiming credit for the hacking of Sony Pictures Entertainment threated violence against theaters showing "The Interview" earlier this week, the fate of the movie's big-screen life was all but ...

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.