The southern city of Daegu in South Korea is the heart of Samsung. It's where Lee Byung-chull founded the company that would go on to make him one of the wealthiest men in South Korea in the first half of the 21st century.
Samsung has moved from trading textiles to manufacturing high-tech devices, and the prestige of Daegu has since fallen behind many port cities that focus on chemicals, heavy industry, and shipbuilding.
It's there that the firm, in cooperation with the government, launched the Daegu Center for Creative Economy & Innovation (CCEI), a startup accelerator, in September 2014. It has temporarily set-up its office at the city's trade hall.
Where Lee's office still stands, Samsung is building a park-themed campus in a 130,000 square metre area of land provided by the Korean conglomerate to house the CCEI, to be completed in November.
"We are really making something out of scratch here," said Sunil Kim, CEO of the centre. "The life expectancy of global companies is getting shorter and shorter. In 10 years, there will be more changes. The South Korean government, companies and municipal governments must not stay still. We must search for a new way, together."
South Korean President Park Geun-hye's administration, since its inauguration in 2013, has dubbed its economic policy "Creative Economy", a comprehensive plan to shift South Korea's economic focus from industrial manufacturing to high-value, idea-driven businesses. The Creative Economy and Innovation program is one of the initiatives, where startup accelerators, each backed by different conglomerates in different industries, are built across South Korea to promote new ideas and companies. The Ministry of Science, ICT and Future Planning, which combined the formerly separate telecommunication ministry and science ministry, was also formed under the drive.
At least locally, there have been many critics, some vehement, towards the policy, as well as the program, for being "vague". Also, many resent the fact that it is government-driven due to the country's long history of planned economy -- where government ordered businesses to foster -- and point out that the private sector should be in the driver's seat.
Kim disagrees: "In the US there is Startup America [run by the White House] which works with local governments. The megatrend is that governments across the globe are all trying opportunities to overcome [the recession].
"The program should be viewed as a close cooperation of the government and the private sector. Only together can we overcome regulatory, structural, educational, and cultural obstacles that prevent a startup-friendly environment," he said.
In South Korea, the term of office for presidents is five years and there is no reelection, which raises the question of sustainability of the program. The chief executive said what matters is the heart of the drive, not what it is called, and believes fostering creativity will remain an ongoing process, and the priority of this administration and those to come for the coming decades. "Of course, sustainability is never guaranteed. But if we work hard, and share our creative ideas, the program will gain more support," he said.
Startup made easy
A total of 17 centres, co-funded by the state and municipal government where they are located, will be run in different cities with the backing of 15 different conglomerates: Samsung, Hyundai Motor, LG, SK, and other global Korean brands. Two additional centres are privately run, but under the umbrella of the same program. All centres will work closely together, said Kim.
The centres take applications semiannually from anybody with a business idea. In Daegu, 18 firms were selected out of a total of 3,700 applicants, and 17 have graduated. The centre is currently training a second group of applicants, and a third group is awaiting selection. The course is called Creative-Lab, or C-Lab, and the candidates get education in marketing, sales, and distribution.
The applicants can take Samsung employee education and mentoring programs, and also get an opportunity to pitch and cooperate with Samsung's businesses. One team has already cooperated with Samsung Electronics' mobile division, according to the chief executive.
So far, the first group has made 1 billion won in revenue, while the second reached 1.6 billion won. In funding, the first group received 3.5 billion won, while the second got 7.6 billion won.
Park Mu-youl, CEO of Ciel Inc, who is one of the first graduates, said his clientele and revenue rose thanks to the support of CCEI. Ciel Inc makes solutions for transportation -- it tracks the movement of buses and allows its client to manage their schedules. "I was more of a developer and focused mostly on product. The CCEI helped in marketing sales and distributions, areas where my expertise was lacking," said Park.
"Our goals are to vitalize the startup ecosystem here. When we look at applicants, they only need to show their results before going to the market. We don't look at how much money they made," said Kim. "We want to help the core talent reach their potential and get them where they need to be, give them what they need."
The applicant has access to information of all 17 centres; each centre will also suggest which centre, and the backing-conglomerate, will be of most assistance to them, and cooperate. "There is no country in the world that provides a comprehensive infrastructure -- a network that covers municipal governments with an open database run by 15 global conglomerates," the chief executive said proudly.
Though tentative, one big goal of the centres is to connect hundreds of companies across South Korea within five years to cooperate in businesses such as building smart factories. The CCEI is currently providing information of Cheil Industries -- a Samsung affiliate that runs fashion, theme-park, and construction businesses -- to startups so that they can utilise it to sell.
The CCEI is in talks with educational institutes in Brazil, the UK, France, and Switzerland, among others, to set up an exchange program. Startups in South Korea will get information of global markets, while in the long-run, talented foreigners can apply for the program and stay at the campus. Global startups can also join the program -- the CCEI is cooperating with Samsung's innovation centres, its startup incubators, in New York and Silicon Valley.
"We need to import global talents from all over the world to draw up a big picture for new businesses," said Kim.