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Introduction: Varieties and Alternatives of Catching Up: Asian Development in the Context of the Twenty-First Century Read chapter Read first chapter

2016 | OriginalPaper | Chapter

5. The Catch-Up Process in the Korean Steel Industry

Author : Makoto Abe

Published in: Varieties and Alternatives of Catching-up

Publisher: Palgrave Macmillan UK

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Abstract

This chapter examines how South Korea’s steel industry caught up with the Japanese steel industry technologically by focusing on the relationship between the phases of innovation, the speed of technological catch-up, and institutions. Two large waves of innovation occurred in the industry after World War II. Korean steel companies succeeded in accelerating the catching-up process by concentrating their investment at specific phases of each innovation cycle. In the first wave of innovation, South Korea concentrated its investment on the construction of integrated steelworks by establishing the state-owned monopoly firm, POSCO. In the second wave, the market entry of Hyundai Motor Group through vertical integration and POSCO’s countermeasure allowed for developing high-quality steel sheets, which further pushed forward the catching-up.

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previous chapter Industrial Development and Linkage Formation in Korea: A Case Study of the FPD Industry
next chapter Advantages of Backwardness and Linkage Effects: The Steel Industry in Asia
Footnotes
1
Tanaka also has regarded Gwangyang Work as a sophisticated version of the mass production system developed by Japanese companies, which focuses on the factory layout (Tanaka 2008).
 
2
Kawabata called the mass production system developed by Japanese companies after World War II ‘a second-generation integrated production system’. The system of development and production of high-quality steel was based on the same major facilities as those of the second generation, but realized flexible production. So Kawabata called this new system ‘generation 2.5’ (Kawabata 2012).
 
3
However, for some grades of steel sheet, the amount required by automobile affiliate companies of the Hyundai Motor Group is too small for the steel affiliates to manufacture profitably. So the group does not plan to develop and manufacture all the grades of steel sheet which its automobile affiliate companies need (Interview at Hyundai Motor Group on 25 November 2010).
 
4
POSCO has organized Early Vendor Involvement activity with over 10 automakers, including the Hyundai Motor Group.
 
5
Interview at the Oppama Factory of Nissan Motors on 21 May 2009.
 
6
Recently, some automobile makers have begun to review the degree of usage of high-tensile steel in their models in order to reduce costs. The model for whose production Nissan Motors moved to Thailand in 2010 was designed so that it could be manufactured with high-tensile steel of relatively low strength. This enabled POSCO to increase the amount of steel sheet sold to Nissan.
 
7
As for the development of FINEX, see Song and Song (2010) and Lee and Park (2010).
 
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Metadata
Title
The Catch-Up Process in the Korean Steel Industry
Author
Makoto Abe
Copyright Year
2016
Book
Varieties and Alternatives of Catching-up

Print ISBN: 978-1-137-59779-3

Electronic ISBN: 978-1-137-59780-9

Copyright Year: 2016

DOI
https://doi.org/10.1057/978-1-137-59780-9_5