Focused Support for Exporting Profitable 'K-Services'... Boosting Content and Medical Sectors

Emergency Economic Meeting Announces 'K-Service Overseas Expansion Activation Plan'
Fostering Six Promising K-Services Including Content and Medical
"Aiming to Become a Top 10 Global Service Export Power by 2025"
Establishing K-Service Export Support Framework Following K-Trade Strategy and K-Quarantine
"Export Support Shifts from Manufacturing to Services... 4.6 Trillion KRW Invested by 2023"
"Improving Overseas Intellectual Property Rights and Service Export Statistics System"

[Image source=AP Yonhap News]

[Asia Economy Reporter Moon Chaeseok]

As pessimism arises that export sluggishness will continue into the third quarter, the government has announced measures to revitalize the overseas expansion of 'K-Services.' The plan is to nurture six promising K-services, including content and medical healthcare, to become one of the world's top 10 service export powerhouses by 2025.

The Ministry of Trade, Industry and Energy finalized and announced the 'K-Service Overseas Expansion Revitalization Plan,' prepared together with six ministries including the Ministry of Economy and Finance, at the Emergency Economic Central Countermeasures Headquarters meeting held on the 13th.

Fierce Global Competition in Content and Intellectual Property Rights... Korea's Exports Plunge by -20%

[Image source=Yonhap News]

Recently, global trade is shifting from product-centered to 'product + service'-centered. Exports of content such as games, dramas, movies, music, and intellectual property rights are rapidly growing.

Due to the US-China trade dispute and the spread of COVID-19, the global value chain (GVC) is being reorganized, and demand for non-face-to-face services is increasing.

Meanwhile, export performance has plummeted by around -20%, and pessimism is emerging that the worst-case scenario of export sluggishness in the third quarter and the second half, rather than the government's 'second quarter bottoming theory,' will materialize.

The government evaluated last month's export performance as 'holding up well' with a single-digit decline of -7% compared to the same period last year, but from the 1st to the 10th of this month, it plunged again by -23.6%.

'Profitable' Service Export Customized Support... Fostering Content and Medical Services

[Image source=Yonhap News]

The government announced the 'Post-COVID New Trade Strategy (K-Trade Strategy)' on the 21st of last month to improve the export support system, and this time presented a customized strategy for the high value-added service industry. The support scope will be broader than the existing 'K-Quarantine' export support system.

The support system will be reorganized around three main areas: ▲ resolving corporate difficulties ▲ enhancing global competitiveness ▲ strengthening infrastructure.

Six promising K-service sectors have been selected: ▲ content ▲ medical and healthcare ▲ edutech ▲ digital services ▲ fintech ▲ engineering, and customized overseas expansion strategies will be prepared accordingly.

Service companies will be given preferential treatment in export support projects, and specialized support will be expanded.

In the third quarter, a 'service company customized research and development (R&D) system' will be established. This includes relaxing sales and selection criteria for service sectors and expanding the scope of research and labor costs usage compared to manufacturing.

46 trillion KRW will be supplied to core export-oriented service industries by 2023.

A cultural content fund exceeding 1 trillion KRW will be created by 2024 to support content production and overseas expansion. Within this year, a 100 billion KRW scale 'K-Bio New Growth Fund No. 6' will be established to support overseas investment and expansion of medical services.

Online export support platforms tailored to demanders for B2B and B2C will be built. Financial support will be expanded reflecting the characteristics of service companies.

Up to 100 million KRW will be invested in the globalization of online shopping malls operated by small and medium-sized enterprises selling consumer goods. The trade insurance limit for non-face-to-face services will be preferentially doubled.

Attracting Export Resources for Innovative Companies... Discovering Business Models Combining Services and Products

The government rolled up its sleeves to achieve innovative exports. The photo shows a view of Pangyo. (Photo by Asia Economy DB)

Comprehensive support will be provided so that startups and SMEs do not face export barriers due to lack of track records.

This means breaking the structural vicious cycle where companies with technological capabilities fail to achieve results on the overseas stage and rekindling the spark of innovation.

In this regard, customized growth support for K-service startups and venture companies and global standardization work for non-face-to-face services and core technologies will be conducted.

Projects or business models combining services and main manufacturing products will be discovered and supported for R&D and exports in the fields of bio-health, robotics, drones, automobiles, and subscription economy.

Marketing of K-services will be strengthened by linking Hallyu and K-Quarantine.

Core ODA Package Strategy for Developing Countries' Trade Prepared

Korea will also establish a public development assistance (ODA) package strategy, which is key to its role as a 'bridge between developing and developed countries' on the international trade stage.

A new 'Public-Private Joint ODA Project Planning Council' will be created to plan projects linking hardware and services.

It also stated that it will generate synergy in services as much as in manufacturing through existing trade systems such as free trade agreements (FTAs). This aligns with the announcement to adjust industries and support systems according to the market demands of developing and developed countries through the K-Trade Strategy.

Specifically, service and investment negotiations with China and Russia will be conducted to expand the FTA network. Strategic and reciprocal cooperation projects will be discovered in key service sectors in promising markets such as New Southern and New Northern regions.

Concrete Implementation of 'K-Trade Strategy' Utilizing FTAs

Sung Yun-mo, Minister of Trade, Industry and Energy. / Photo by Jin-hyung Kang aymsdream@

Through the FTA Comprehensive Support Center, information provision on service agreements will be strengthened, FTA e-learning programs will be expanded, and efforts will be made to conclude digital partnership agreements encompassing digital agreements and cooperation projects.

The overseas intellectual property center will be expanded, and support projects for responding to international intellectual property disputes will be strengthened.

Specialized trading companies in the service sector will be fostered to establish a stable global logistics network.

Minister of Trade, Industry and Energy Sung Yun-mo emphasized, "The convergence of manufacturing and services and the activation of online platforms triggered by the 4th Industrial Revolution are accelerating further after COVID-19," adding, "Whether the export competitiveness of the service industry is strengthened will determine our future food source creation."

Minister Sung said, "With the elevated national status through COVID-19 response as a background, we will spare no support to help the service industry grow as a new export growth engine."

This content was produced with the assistance of AI translation services.