The Korean Mobile Phone Industry Development: Is It Really a Success Story?

Korea has transformed from an importing country relying on foreign firms and their technologies in its telecommunication industry up to the early 1990s to a formidable mobile phone exporting country in the recent years. As a result of intense efforts to advance the digital mobile phone system, the mobile phone business has been one of Korea’s backbone industries. The Korean mobile phone makers including Samsung and LG have enjoyed their world leader status in the highly competitive mobile handset market.

The successful CDMA-based mobile handset project has been considered to be one of the most exemplary cases for Korea’s high tech business development. The CDMA cellular phone service was successfully commercialized in 1996, ahead of all other countries. The Korean government successfully carried out the national R&D project for the CDMA-based handset. Of course, the private firms did their part in developing and commercializing the CDAM-based mobile phones.

The development of the CDMA-based technology is meaningful in two aspects. First, whereas the Korean high tech firms usually took the fast follower approach in the global electronic markets, they successfully exploited the first mover advantages in developing and commercializing the CDMA-based mobile phone system. Second, the successful development of the CDMA technology marked the rare public-private cooperation in the history of the high technology development in Korea.

However, one might raise a question as to whether the government’s role in the aggressive market development was appropriate. If the Korean government’s R&D policy in the mobile phone industry was so successful, as many have claimed, why can it be applied in another sector? It seems to be widely agreed that Korea has not come up with post-IT growth engine for economic development. Why can the Korean government’s insights and interventions used in the mobile phone business be applied in the next growth engine? Who has benefited the most from the Korean government policies? What are the drawbacks of the government’s excessive interventions?


Note: I have written an analysis of the Korean mobile phone industry development. Only a glimpse of it will be shared on this blog. If any of you might be willing to review and comment on my drafts (depending on your background and interests), please ping me.