Investing 4.6 Trillion in Industrial Digital Transformation... Elevating Maturity from 'Crawling' to 'Establishment' Stage

Ministry of Industry Announces 'Industrial Digital Transformation Expansion Strategy'

Most Companies Currently Remain in the 'Preparation and Introduction' Stage
Ministry of Trade, Industry and Energy to Promote Enactment of Related Support Laws Alongside Large-Scale Public-Private Investments

Industry DX Levels by Major Sectors.

[Sejong=Asia Economy Reporter Joo Sang-don] The government has decided to invest a total of 4.6 trillion KRW, including 2 trillion KRW in government budget by 2025, through funds, guarantees, and other means to accelerate the digital transformation (DX) of industrial processes, products, and services. The goal is to elevate the current nascent level of digital transformation maturity in domestic industries to the 'establishment' stage or higher, where companies proactively apply DX internally.

On the 1st, the Ministry of Trade, Industry and Energy (MOTIE) held an 'Industrial Digital Transformation Field Meeting' at the Busan Hyundai Global Service headquarters, chaired by Minister Sung Yun-mo, and announced the 'Industrial Digital Transformation Expansion Strategy' containing these details.

MOTIE recognized that to expand industrial digital transformation across industries and sectors, a systematic policy framework of 'level diagnosis → goal setting → customized support' is necessary. After consultations with industry and experts, they developed the 'Industrial DX Stage Model.' The DX stages consist of five levels based on DX strategy maturity, scope, and type of activities: 'Preparation - Introduction - Establishment - Expansion - Advancement.'

Industrial DX Maturity Model.

Subsequently, using this model, a maturity survey was conducted on 500 companies across the top 10 domestic industries including steel, home appliances, shipbuilding, future cars, bio, and distribution. The results showed that most industries and companies remain in the 'Preparation' stage, where digital transformation strategies are being experimentally applied, or the 'Introduction' stage, where some enterprise-wide strategies are formulated.

By industry, large companies leading customer service touchpoints such as future cars, home appliances, and distribution are undergoing innovation through digital transformation. However, the general-purpose materials and components industries, mainly composed of small and medium-sized enterprises (SMEs) that rely on traditional B2B transactions, showed low levels of digital transformation.

Jang Young-jin, Director of Industrial Innovation Growth at MOTIE, explained, "The overall digital transformation levels and scopes vary by industry, entity, and region, making it difficult for our industries to sustain global competitiveness in the digital economy characterized by 'winner-takes-all' through investments centered on some large companies. Considering the network effects of the digital economy and the ripple effects across industries, we have prepared a 'Digital Big Push' strategy that simultaneously innovates the entire industrial value chain based on 'solidarity and cooperation.'"

The government's goal is to achieve an average industry digital transformation level of 'Establishment' or higher by 2025, and for 30% of leading companies in the top 10 industries to reach the 'Expansion' stage or above. Expansion refers to a level where collaboration among companies within an industry is realized through digital transformation.

To this end, MOTIE plans to secure a systematic implementation foundation by reviewing comprehensive industrial digital transformation plans, implementation plans, and industry- and function-specific strategies through the 'Industrial Digital Transformation Committee.' Additionally, a survey will be conducted every three years to assess DX levels by industry and sector, which will be used to formulate support policies.

Customized support by industry will also be provided. For example, in the steel sector, an intelligent electric furnace system that can optimize raw materials, operations, and electric furnace performance in real time will be supported. In shipbuilding, smart ship systems supporting autonomous navigation and proactive remote operation & management (O&M) will be promoted as representative projects. Furthermore, various types of industrial process benchmarking model projects and on-site practical projects allowing companies to experience digital transformation firsthand will be implemented.

To support these efforts, the government plans to invest 2.58 trillion KRW in fiscal resources by 2025, including 490 billion KRW secured this year. Adding the Digital Industry Innovation Fund, which will be raised up to 400 billion KRW by 2024, and financial support agreements totaling 2 trillion KRW with the Korea Credit Guarantee Fund and Shinhan Bank, a total of 4.56 trillion KRW will be invested in industrial digital transformation.

Minister Sung Yun-mo of MOTIE stated, "This year, with the enactment of the Industrial Digital Transformation Promotion Act, the announcement of the expansion strategy, and the advancement of leading projects such as the establishment of an industrial data platform, we will solidify a comprehensive support system to trigger private-sector-led industrial digital transformation. Through the Digital Big Push, where the entire industrial value chain cooperates to simultaneously pursue digital transformation that individual companies find difficult to achieve alone, we will fully expand digital transformation across industries and generate tangible results."

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