Automation Around the World – South Korea
South Korea is a country of extreme contrast when thinking about automation.
On the one hand, when you think of South Korea, you think of the closest thing to a technological utopia. In 2017 the International Federation of Robotics named South Korea as the most robotic country in the world.
Despite this, South Korea’s warehouse automation is lagging behind. In 2016 the global logistics firm Prologis reported the following
“95% percent of [South Korea’s] existing inventory of warehouse and distribution floor space is outdated and obsolete. South Korea’s supply chain operations and practices have a long way to go to reach world-class status.”
So what is going on here? Is South Korea on the cusp of the robotics revolution’s frontline? Is it somewhere that needs to grow and develop much more before it can claim that title? To understand further, we’ll be examining the ways South Korea is ready for the future, as well as the factors that are holding it back.
Push forward – Amazing infrastructure
To make the fullest use of the robotic revolution, good infrastructure is extremely valuable. As we have discussed previously in the case of India, lacking infrastructure can hold nations back when it comes to outside investment and advanced technology. This is an area where South Korea is far and ahead out in front.
South Korea’s internet reaches more of its people than any other similarly-sized nation. 95% of its 50 million-strong population has internet access. Not only that, but they have much faster internet connections than almost anyone else. As of May 2020, South Korea has the fastest mobile internet in the world, with download speeds of over 100 Mbps. The same period has South Korea as the second-fastest fixed broadband internet provision among nations with over 20 million citizens. An average broadband speed of 148 Mbps, just below double the global average.
With these kind of internet speeds, South Korea is very well placed for Industry 4.0. Warehouse robotics doesn’t just need stable power supply, it needs a strong and steady stream of fast data, rapidly and efficiently provided. Something South Korea is well placed to offer.
Hold back – Innovation failure
While South Korea has a well-earned reputation for advanced technology, this isn’t the same thing as having a business and management environment that advances innovation culture. Samsung might spar strongly with Apple, but it has yet to produce the kind of market shifting grand slam that was the iphone.
South Koreans lead the world in research and development (R&D) investment. They spend 4.23% of the nation’s GDP on R&D, second only to Israel with 4.25%, and dramatically ahead of Switzerland with barely 3.5%. However, most of this research is conducted by enterprises known as ‘chaebols’. These large family run conglomerates. Their expensive R&D projects get funded through tax incentives and low cost government loans.
South Korea plays host to very little in the way of ‘blue sky’ innovative thinking. Smaller and medium sized enterprises in South Korea spend very little on their own R&D. These companies rely on a ‘drip down’ effect of innovation. Their hope being that innovation flowing down from bigger companies will allow them to do more.
With the larger companies so intent on large investment, there is no space for more risky, more innovative ideas. This makes it harder for the robotics revolution to find its grounding.
Providing a local perspective on this, Kim Myung-ja at the Korean Federation of Science and Technology Societies, said to the Financial Times:
“It is hard to pursue creative or challenging research in our environment, where failure is not tolerated and instant results are demanded. We can never become the first mover with this risk-averse culture.”
Push forward – A workforce experienced with robotics
As we previously mentioned, South Korea is the single most robot-familiar workforce in the world. It has 631 robots per every 10,000 workers, which is eight times the global average. The competition worldwide doesn’t even come close. South Korea has 29% more robots than its next closest rival – Singapore, and more than double the third-place Germany.
While the majority of South Korea robots are industrial, many related technical skill sets are highly transferable. This puts South Korean warehouses in an excellent position. As the pressure to deploy robots advances, they will have access to experienced and educated workers. A group who understand how to get the very most out of automation on a technical level, on a day-to-day basis.
South Korea has more experience and understanding in this sector than any other country in the world. This is why it will be a place to watch as the B2C warehouse side of the robotics revolution takes hold.
Hold back – Ecommerce saturation
One of the factors restraining warehouse automation in South Korea is the state of the B2C ecommerce marketplace. Internet availability in South Korea is higher than almost anywhere. Bandwidth speeds are beyond phenomenal. Yet, the marketplace may be suffering.
In 2019, 88% of South Koreans had bought something online in the previous year. This would suggest that the marketplace has limited space to expand further into. This is why ecommerce DB predicts South Korea’s ecommerce market growth between 2019-2023 as being only 5%. In contrast, the same source predicted US growth over the same period to be 12%, and France and Germany both 9%.
If the ecommerce market is struggling to grow, it may well be that there is not the same kind of pressure felt to innovate and advance. The marketplace may not seem like faster delivery times and cheaper products are a high priority. Many other countries have more competitive marketplaces with a higher potential for growth. It could well be that South Korea finds its ecommerce sector underperforming and out of luck.
Push forward – Expensive workforce and living costs
While South Korea’s external market pressures are low, the internal business pressures of wages and cost-of-living are much higher.
In comparison to other countries with over 10 million citizens, South Korea has the second-highest level of cost of living in the world, according to Numbeo.com. In Asian countries within the same population bracket, South Korea’s average wages are the second most expensive.
These kinds of pressures are ideal for advancing the robotics revolution. More and more businesses will find themselves unable to afford to offer the level of wages required. As the cost of living in South Korea rises, and more expensive wages are needed, warehouse companies will need to extract more value from their pickers. This means getting pickers involved in more diverse roles in highly varied capacities. Ensuring that the pickers they employ are worth these ever-inflating costs.
The robotics revolution is advancing further and faster all around the world. If you would like to see what it can do in the UK for your company, come and visit us. Visit our display and demonstration centre in Lincoln, the pre-eminent example of its kind in Europe. Learn how your business can take the next step with flexible robotics and discover how easy automation can truly be.