3D CAD in Korea, Japan, Taiwan

Disclaimer: This document was created in 2000 and has not been revised since.

i. Potential Partners

1. SME Market: At this time (2000) the South Korean Internet does not have an equivalent to Japan's NC-Net or Taiwan's Mold.net and CAD CAM Online: there is no single player with a dominant Web presence able to leap-frog ASP-CAD into this market. Probably the closest match in this market is the CADKorea site, which is the site most likely to become a focal point as South Korea's e-manufacturing market takes-off. Another option could be to acquire either of the Korea CAD Forum or 3DCAD sites and to invest in a market awareness strategy. Both sites appear, incredibly, to be the sideline work of amateurs (which would explain the infrequent update of content) so cost of acquisition may be surprisingly low. A further option is to team with one of Korea's numerous non-aligned multi-system dealer/integrators or developers. CAD&Future and CAMTech both fit such a profile but CAD&Future have by far the most professional Web presence. Of the CAD CAM developers CubicTek and TurboTek are probably two of the stronget candidates.
2. Super-conglomerate intranet market: The most efficient way to enter this market is probably through a partnership with the primary IT subsidiary of each conglomerate (as in the LG-EDS ASP partnership recently announced). Typically large Asian conglomerates try to keep core functions in-house and the uninvited attention of third-party suppliers is not encouraged. The creation of such partnerships will be a time-consuming process but it has to be considered that the four super-conglomerates control half of South Korea's manufacturing industry so the revenue potential is very substantial.
   Recommendation: joint-development, funded by a conglomerate could be a good business model for this sector. An alternative (or parallel) strategy could be to partner with a non-aligned hardware vendor (SGI for example) as they will already have a well developed set of relationships in this market.
3. Super-conglomerate extranet market: This market is effectively the osmotic zone between the super-conglomerates and the independent manufacturing SMEs. In the traditional CAD CAM software market the negotiating power of the large conglomerates typically reduces the value of direct sales into the main hub whereas the comparatively disadvantaged position of the 3^rd-party SME suppliers, who have to maintain compatibility with the conglomerate customer, makes supplier chain sales much more lucrative (thus the supplier-chain market is so critical for the Big-4 software vendors). The best partners in this market will likely be the more sophisticated mainstream CAD CAM dealer/integrators. SungWoo Systems already host CoCreate's OneSpace system but could be a possible candidate for another ASP CAD CAM solution if it is a complimentary fit with OneSpace. ATES, CIES and DooSon Systems are other up-market system integrators who may also fit the required profile. Another design/engineering consulting firm, Kar Tech may also be a potential partner in this market.

ii. Potential Competitors

There are presently no direct competitors in the South Korean market. Surprisingly ITI/FEGS do not seem to have a direct (or any) presence in South Korea and Maru International, while doing a good promotion of IronCAD, are more aligned to the CG/multimedia market and unlikely to represent the Alventive ASP service.

CoCreate's OneSpace Collaboration Station is hosted in South Korea by SungWoo Systems, who also distribute CoCreate's traditional packaged software, but OneSpace seems more of a "3D notes" environment that the broader range of functions I envisage in a fully featured ASP CAD CAM solution.

Considering that CAD CAM software vendors spanning the spectrum from TopCAD and Bentley Systems to Autodesk and UGS all have direct subsidiaries in the Korean market, competition can be expected from them as and when they have ASP solutions to offer - still, at least for the foreseeable future the manufacturing SME market seems so fragmented that a new entrant should be able to achieve a significant market lead

iii. Potential Allies

Potential allies differ from potential partners because their support and encouragement tends to be motivated by personal interest (the gratification of contributing to, or being seen to have influence on, the general advancement of industry/technology) as opposed to pure corporate profit. Typically these allies or champions will be academics, press editors, government officials, officials of industry organizations and very often users

It will be a key activity to build strong relationships with the useful members of this group. Success in Japan and elsewhere, particularly in the early years, can often be traced directly to the involvement of allies/champions and so it will likely be in South Korea.

iv. Potential Customers

The analysis so far indicates the 4 superr-conglomerate opportunities and a manufacturing SME opportunity of 91,000 potential customers. While this market has a much larger size than the Taiwanese market, the dynamics are fundamentally different. The South Korean e-manufacturing market has been slow to develop, there is no Mold.net (Taiwan) or NC-Net (Japan), but that may be because of the large number of mainstream vendors in this market who do not have an immediate interest in seeing market sentiment turn towards ASP CAD CAM solutions.

Ultimately the fragmentation of this market, combined with its lack of evolution, provides a new entrant with the opportunity to quickly establish a dominant position. My recommendation would initially be to separately focus on the super-conglomerate and non-aligned manufacturing SME markets. Success in the former will also logically create opportunity in the conglomerate-SME extranet sector and the latter sector is very synergistic with the Taiwan market opportunity.

Revenue in the Korean market is difficult to predict but will probably breakdown 60% - 70% super-conglomerate derived and 30% - 40% manufacturing SME derived with a projected $5m - $10m in the third-year of operation.

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