The 'Bare Face' of an IT Powerhouse... Top-Tier Infrastructure, Low Digital Competency

Concerns Over Declining Competitiveness of Companies and Nations
Need for Continuous Government Response Policies Emerges

[Asia Economy Reporter Kim Jin-ho] Despite South Korean companies having world-class digital accessibility, their digital utilization levels were found to be lower compared to major countries. This indicates that the excellent infrastructure is not being properly utilized, raising concerns about the competitiveness of both companies and the nation in the digital era.

◆ World-Class Digital Accessibility = On the 29th, according to the Korea Economic Research Institute, an analysis of digital competitiveness comparison data from major overseas institutions showed that South Korea has one of the top digital environments worldwide. South Korea ranked 12th among 64 countries surveyed in the digital competitiveness ranking published by IMD.

South Korea ranked 11th out of 120 countries in the Inclusive Internet Index by EIU and 8th out of 141 countries in Cisco's Digital Readiness Index. Notably, among OECD countries, South Korea had the highest number of fixed broadband subscribers with speeds over 100 Mbps per 100 people, at 40.0. This means that access to high-quality internet is at a world-class level.

◆ Decline in Corporate Digital Capabilities... SMEs More Vulnerable = However, despite this high level of digital accessibility, key indicators reflecting corporate digital utilization capabilities were analyzed to be lower than those of other countries. In particular, small and medium-sized enterprises (SMEs) with fewer than 250 employees showed lower digital capability indicators compared to large enterprises with 250 or more employees.

A comparative analysis of the Eurozone (19 countries), the UK, and South Korea showed that South Korean companies scored below average in cloud computing usage, CRM software usage, and e-commerce sales proportions, which are indicators of digital economy utilization capabilities.

Especially, although cloud-based digital transformation is expected to accelerate after COVID-19, the proportion of cloud computing usage among South Korean large enterprises was 46.5%, ranking last among the 20 countries surveyed. SMEs recorded 24.5%, ranking 19th among the 20 countries surveyed.

The proportion of CRM usage, which plays a central role in personalized customer relationships in the digital economy era, also remained near the bottom. Among large enterprises, CRM software usage was 51.2%, and among SMEs, it was only 17.3%, both ranking 19th out of 20 countries surveyed. The proportion of companies generating e-commerce sales was 38.2% for large enterprises, ranking 17th among the 20 countries surveyed.

The Korea Economic Research Institute pointed to South Korea’s aging population and digital polarization as reasons why SMEs lag behind large enterprises in digital transformation. The proportion of employees aged 60 and over in SMEs is higher than in large enterprises, and the gap is widening. The digital polarization by age group in South Korea was found to be among the highest within the OECD.

Among those aged 16 to 24, the proportion of digital high-skilled individuals was 63.4%, the highest among OECD countries, whereas for those aged 55 to 65, it was only 3.9%, revealing the largest generational digital skill gap among OECD countries.

However, in terms of the proportion of companies using big data, large enterprises recorded 47.7%, ranking 6th among the 20 countries surveyed. SMEs also ranked relatively high compared to other areas.

◆ "Continuous Response Needed for Digital Technology Advancement" = Accordingly, the Korea Economic Research Institute called for continuous policy responses to improve corporate digital utilization and capabilities and to prepare for the aging workforce. In fact, South Korea’s investment rate in ICT technology education and training tends to fluctuate significantly depending on external economic conditions.

Jo Kyung-yeop, head of the Economic Research Department at the Korea Economic Research Institute, argued, “Rather than focusing on short-term and monetary measures such as subsidies or loans, continuous measures that enable adaptation to digital technology are necessary.”

He added, “Attracting talent with digital skills is the fundamental solution to strengthening digital capabilities, so digital-related education and training must be enhanced. It is also necessary to intensively improve digital adaptability among the elderly.”

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