CAD in Korea, Japan, Taiwan

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

i. CAD CAM Software Market

South Korea's introduction of ESCROW in March 1999 marked the end of a decade of intensive government investment in intellectual property research and development and the beginning of the drive to become a major player in the global software market. Throughout the 1990s South Korea's government actively promoted and funded numerous joint-research projects and exchanges with many leading US universities and research institutions and; in a successful emulation of the Chinese model; actively encouraged Phd and other post-graduates to join US software firms and 'learn the business". One related investment is the government's construction of the i-Park facility in Silicon Valley to incubate hi-tech South Korean start-ups.

In 1992 South Korea's software industry was almost nonexistent; just five years ago software imports ($350m) were 10x software exports ($30m); but the industry grew an average of 30 - 40% annually throughout the 1990's and there are already more than 4,000 dometsic software development companies. Started in 1999, the government has a five year, $500m, program to support, fund and promote domestic software developers and will invest $90m directly in software SMEs in 2000. The government hopes to achieve an annual target of $2.5bn software exports when the current program finishes in 2004.

South Korean software is already strong in the 3D games, VR and multimedia markets (there is already one cable ISP providing a domestically developed 3D TV Web service) and rapidly gaining ground in grassroots 3D CAD software and computer aided design development. The government wants domestic developers to become self-sufficient in industrial automation, multimedia, communications, e-commerce software and component technology and several government agencies and research institutes are actively channeling resources into those areas. One university even has an active 3D geometric modeling for CAD program under development, although it is unlikely to evolve to a commercial solution in the near future.

There are a surprising number of domestic 3D CAD CAM software developers and all of the major international CAD CAM software vendors have well established subsidiaries and dealers in South Korea: Autodesk has a huge number of ISVs and SolidWorks seems to have an almost fanatical following. Of the four major EWS vendors PTC seems to own market sentiment. Many manufacturing SMEs seem to use 3D CAD software products from multiple vendors.

Key point: The South Korean 3D CAD software market is over-saturated with vendors but the obvious popularity of Autodesk and SolidWorks indicates that the market is cost sensitive. There is an opportunity for an ASP CAD CAM vendor to use Internet efficiency to achieve an initial position based on price competition.

Key point: Despite the dominance of the conglomerates there are a significant number of export oriented manufacturing component suppliers who need to operate across several vendors' platforms.

Key point: The presence of many software developers with 3D related experience should make it relatively easy for an ASP CAD CAM vendor to find a good localization partner.

ii. ASP Market

Surprisingly the South Korean ASP market has been relatively slow to emerge - possibly because the conglomerates own and contro private extranets. The market is beginning to evolve and a major commercial ASP was created in March 2000 as a joint-venture between the Korea Telecom HiTel ISP subsidiary and Computer Associates. The four superconglomerates each have plans to create ASPs, LG having already teamed up with EDS. In the manufacturing market SungWoo Systems host a Korean version of CoCreate's OneSpace service.

The South Korean government estimates a domestic ASP market of $585m annually within five years and is investing aggressively in infrastucture to encourage domestic developers to launch new ASP businesses. The government intends to ensure the newly emerged domestic software industry quickly achieves a dominant position in the ASP market prior to the expected rapid growth. Thirty or so companies have presently applied for government funding and support.

Key point: The vehicle for market entry needs to be carefully considered. The timing could be good for a joint-venture structured so as to satisfy government requirements for funding/sponsorship approval.

Key point: Early timing of market-entry is key to ensure strong positioning prior to the expected market explosion.

next - Korean Internet market 2000.  >>