Government R&D Policy for SMEs

- Main in 2020 -

543,249

260,494

156,128

112,185

77,896

56,52343,889

26,592 26,319 23,424 22,901 18,945 18,401 17,468 16,538 16,055 15,848 13,374 13,161 10,048 8,363

2.79

2.15

3.21 3.04

4.81

2.19

1.66 1.55

1.35

1.88

3.37 3.30 3.34

1.11

1.99

4.54

1.21

2.70

3.16 3.05

2.09

0.00

1.00

2.00

3.00

4.00

5.00

6.00

0

100,000

200,000

300,000

400,000

500,000

600,000

R&D Expenditure(Million US dollar) R&D per GDP (%)

* Total R&D Expenditures : more than 85 trillion KRW- 1 -

11.5 13.9 9.213.5 14.3

8.715.2

8.2

13

12

17.420.7

23.77.2

80.373.1

78.8

69.165 67

77.6

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Korea(2018) United

States(2017)

Japan(2017) Germany(2017) France(2017) United

Kingdom(2017)

China(2017)

Public Research Institute University corporation

63.7 63.6

13.9 14.5

10.9 11.211.5 10.7

0

10

20

30

40

50

60

70

2018 2017

Large-sized enterprise Medium-sized enterprise

Small-sized enterprise Venture company

44 trillion KRW69조

* Private sector invested approximately 69 trillion KRW

- 2 -

Target for R&D Support (SMEs)

R&D Support by Ministry of SMEs & Startups (MSS)

Annual R&D Budget (by 100 million KRW )

2018 2019 2020

Original Final Original Final Original

10,917 11,036 10,744 11,012 14,455

〮 About 1 trillion KRW per year during last 3 years

- More than 840 million USD per year

〮 Categorized by object and scale

- Start-ups or Incumbent Manufacturers

- Industry-Academia-Research Partnership

Total # of SMEs Korea

SMES w/ R&D demand

R&D Support by the Government

R&D Support by Min. of SMEs & Start-ups

6,000~7,000

12,000

206,000

3.96 million

# of total SMES – 3.96 million

# of SMEs with R&D demand – about 206,000

Among the, 12,000 firms carried out R&D

- More than 50 million KRW R&D spending +

More than 1 researcher involved

* Source: KISTEP Report 2018

- 3 -

Viva Republica Ltd.

* After 5 years of R&D support by MSS, Viva

Republica has grown up to Unicorn

- Mobile application software for money transfer

2 of 11 Unicorn Companies in Korea received R&D Support by MSS

By providing R&D subsidy, MSS has

supported start-up to grow up to Unicorn

Start-up can make huge performances even

with small amount of R&D support

Yellow Mobile Inc.

* Received R&D support by MSS

- Biz model of venture-alliance

- M&A by share exchange

- 4 -

Plan 1

Plan 2

Plan 3

Plan 4

Support New Business Creation

〮 R&D support by phase - from idea to scale-up〮 Focus on frontier technology (Industry 4.0)〮 Technological autonomy - Material, component & equipment

Meet the demand by using various approach

〮 Type of venture capital investment〮 Type of de-regulation〮 Type of social-venture·Type of do-over promotion

Industry-Academia-Research Partnership & Cooperation 〮 Increase cooperative R&D up to 50% - In terms of project number〮 Matching tech-partner, R&D voucher〮 Fraunhofer type entrust R&D〮 Tech-Bridge R&D

Fair selection & convenient use

〮 Rookie First (foundation building)〮 Enhance expertise in evaluation〮 Block unfair competition·Relieve the burden of failure

·Simplify application process

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Support SMEs’ R&D by phase

- From idea to scale-up

Plan

1 Support New Business Creation – Industry 4.0

Focusing on frontier technologies (Industry 4.0)

Reform biz structure by supporting R&D by phase

·Challenge to new biz and make growth

- In the era of ‘Industry 4.0’

·Expand support in terms of period and scale

1st stage

(start)

3rd stage

(mature)

2nd stage

(grow)

Tech. idea

Market test

Market

competitiveness

Globalization

Frontier tech.

Innovation capacity building

·From start to grow until mature not vice versa

- exception : do-over, joint & strategic R&D

Providing more than 200 billion KRW annually

- Frontier technologies ‘Industry 4.0’

· System semiconductor, bio-technology, future car, cloud

computing, AI, big-data, AR-VR, block-chain and so on.

Priority of AI – cross cutting technology & determinant

of industrial innovation

System-semiconductor, bio-health & car of the future

- Funding more than 100 million KRW annually

·System-semiconductor – Fabless company (design, R&D)

·Bio-health (pharmaceuticals & medical device)

·Car of the future (extinction of internal combustion engine)

- 6 -

Plan

1 Support New Business Creation – Industry 4.0

- Exempt duty of procurement

* promote experimental-challenging R&D

- Expand period & amount of funding

* Maximum 3 years/24 hundred million KRW

- Promote consortium R&D among large, middle

and small companies

- Strategic fields : material, component & equipment

* Preferential support

* Private council under the

committee of material-component-

equipment competitiveness

Support division-of labor

type cooperation between

supplier-demander

- 100 Hidden Champs

* preferential support on tech-firms

- Startup 100

* SMEs w/ technological capacity in

material, component, equipment

Council for co-

existing among

companies*

01 02

Promote

Reciprocal Joint

R&D

Project of 100

Hidden Champs

& 100 Start-ups

03

Strategic Items

R&D First

04

- 7 -

Investment Type R&D Type of De-regulation R&D

Type of Do-Over R&DType of Social-Venture R&D

〮 Evaluate separately for social-venture that can create social

values such as welfare and pro-environmental effects

- By using innovative idea or technology

Support the Creation of Social Value

〮 By introducing type of venture investment, induce

commercialization of innovative high-tech

〮 Re-design incentive scheme and share risk properly to

promote high-risk/high-return R&D

Private Investment First, Gov’t Matching Next

〮 Pre-respond to regulation (accreditation, certification) and

eliminate regulatory obstacles

- Package type support including consulting services

Pre-eliminate obstacles in regulation

〮Biz transition – Firms with clear plan will receive R&D

support for biz transition

〮 Comeback – ‘Package projects for successful comeback’

* Consulting, R&D and commercialization support

Biz Transition and Comeback

Plan2 Meet the R&D Demand with Various Approaches

- 8 -

Expand Tri-lateral R&D up to 50% Fraunhofer Type Entrust R&D

Tri-lateral Cooperation Infra &

Global R&DPromote Commercialization by

Tech-Bridge R&D

- 9 -

Plan

3 Industry-Academia-Research Cooperation enforcement

〮 Encourage tri-lateral consortium and cooperation R&D

Expand Tech-Collaboration R&D (39%~50%)

〮 Individual demand – Entrust tech. development and boost

recycle of initially unsuccessful product/technology

〮 Collective demand – GRIs and national labs develop

common tech. and applied tech.

Entrust Tech. Development to University & GRIs

Enhance Tech-Innovation by using national R&D Asset

〮By utilizing Tech-Bridge (tech. transfer platform of Korea

Technology Finance Corporation), transfer accumulated tech.

owned by academia/research to SMEs and commercialize

Tech. Transfer/Commercialization 〮Allow SMEs to use excellent human resources, R&D

equipment and tech. infra at academia and research

〮 Promote joint R&D for global market targeting among

SMEs, GRIs and local government

- To boost export toward ASEAN, India & Eurasia contries

Firm Innovation (Individual) Open Innovation (Collaborative)

Mature

Stage

Grow

Stage

Start

Stage

Mature

Stage

Grow

Stage

Start

Stage

Export-Oriented

Tech. Incubator Program For Start-up

Market-Expanding

Support Gazelle

Strategic Start-up

Market-Oriented

Foothold Start-up

Commercialization of Foreign Tech.

Command Demand from local SMEs

Commercialization

Industry-Academia-Research Collabo

Tech-Bridge

Leading Research Institute

Tech. Holding Company

Factory Quality Collabo-Platorm

Policy

Purpose

D.N.A

Local Industry

Regulation

Innovation Infra

AI, Big-data, Smart-sensor, Smart city

Locally specialized industry, Regulation-free zone

Global accreditation

R&D personnel, R&D equipment, networking

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Thank you!감사합니다!

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