Despite rapid digital transformation shaking up industries from manufacturing to finance, South Korea still lacks companies that can provide digital solutions to business challenges, a tech chief executive officer of retail and food giant CJ Group said Wednesday(May 11).
“It’s the ugly truth that although it is crucial to use cutting-edge digital technologies to improve business operations and satisfy customers, these initiatives are not being delivered fast enough,” said Cha In-hyuck, CEO of CJ Olive Networks, a tech subsidiary of retail and entertainment giant CJ Group, at the Global Business Forum hosted by the Korea Herald in Seoul.
“More than 86 percent of the companies here recognize the importance of going digital using technologies like artificial intelligence, machine learning and data science, but it has become extremely difficult for them to find the right providers.”
Korean businesses, both small and big, suffer from rising costs and operational inefficiency because they lack access to digital solutions, Cha said.
“Even though Korea is known as the country with the best IT services, especially fast internet, the market size for digital solutions is incredibly small,” he said.
IT security firm AhnLab is one of the largest digitalization service providers here, but its sales revenue is merely one-1,500th of US tech behemoth Microsoft, he added.
IT subsidiaries of conglomerates including Samsung and LG, and tech giants like Naver and Kakao have the capacity to provide support. But they are not open for collaborations with SMEs or startups that could also contribute in improving their business models, he said.
“We need to acknowledge that most small companies are falling behind in the ‘platform era’ where interactive communication with customers based on digital transformation becomes a core part of every business.”
Cha said the key to digital transformation is to carry out “disruptive innovation,” in which small companies move up the value chain based on drastic transformation, and challenge large incumbent firms. “With help from data solutions firms, companies can focus on their core competencies in the industry.”
Cha introduced the case of CJ CheilJedang, a food manufacturer under CJ Group, saying that it has reduced the cost of importing raw grains by 3 percent last year from a year earlier by using big data analysis in collaboration with an AI tech firm.
Aside from leading CJ Olive Networks, Cha also serves as chief digital officer at CJ Group and digital new deal part manager at the presidential commission on policy planning. Before joining the company, he headed a tech insight group at SK Telecom and was head of analytics business at Samsung SDS.