"Conglomerates with Assets Over 5 Trillion Enter New Industries, Largest in 10 Years"

Federation of Korean Industries Analyzes Industries of New Affiliates
70 out of 297 New Affiliates in the Past Year Operate in New Industries
Growing Interest in Virtual/Augmented Reality and Healthcare... Reflecting Changing Times

Data provided by the Federation of Korean Industries

[Asia Economy Reporter Kim Heung-soon] #As COVID-19 spread and non-face-to-face interactions became the norm, the metaverse (extended virtual world) has been gaining attention. The gaming industry is also actively engaging in metaverse-related businesses. Netmarble's subsidiary, Netmarble F&C, recently established 'Metaverse Entertainment.' The company is known to be planning a 'virtual girl group project.'

#LG Electronics identified the robotics industry as a future growth engine and acquired 'Robostar,' a company with technological expertise in industrial robots, in 2018. Robostar's flagship product, the 'vertical multi-joint robot,' performs movements most similar to a human arm and is used in welding and painting.

On the 15th, the Federation of Korean Industries (FKI) analyzed the industries operated by newly added affiliates of large business groups with assets exceeding 5 trillion won. According to the results, among 297 newly incorporated affiliates in large business groups from May last year to April this year, 70 companies (23.6%) operate in new industry sectors. Both the number and proportion are the highest in the past 10 years. Compared to the period before the COVID-19 outbreak (May 2019 to April 2020), the number increased by 30 companies, and the proportion rose by 7.3 percentage points (p).

The industry with the largest increase in the number of entering companies during this period was 'virtual and augmented reality' with 32 companies, an increase of 24 companies compared to 10 years ago (8 companies). Next was 'customized healthcare,' which had only 2 companies 10 years ago but increased 11.5 times to 23 companies in the past year. The FKI explained that the rise in virtual and augmented reality is due to increased demand for non-face-to-face services caused by the COVID-19 pandemic, and the growth in healthcare is attributed to population aging and increased interest in quality of life.

From April 2011 to April this year, the field most entered by large business groups was renewable energy (132 companies, 15.1%), followed by virtual and augmented reality (111 companies, 12.7%), next-generation communications (110 companies, 12.6%), and big data (103 companies, 11.8%). This reflects ongoing interest in climate change, smartphone popularization, and the Fourth Industrial Revolution.

The FKI pointed out that although large business groups are increasingly entering new industries, various regulations limit business expansion. According to the Startup Korea report released in 2019 by the Asan Nanum Foundation and others to revitalize the startup ecosystem, 31% of the core business models of the top 100 global cumulative investment startups, such as paid automobile transportation services, cloud-based banking, and facial recognition payments, cannot start or are only limitedly possible in Korea.

Yoo Hwan-ik, head of the Corporate Policy Office at FKI, argued, "The government should significantly improve regulations in industries where entry is blocked and provide necessary policy support so that our companies can find more diverse business opportunities."

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