Jason Dedrick and Kenneth L. Kraemer [1995, Electronic Business Asia (February), 72]
The 1980s were the glory days of the information technology (IT) industry in Korea and Taiwan. Riding the crest of the PC revolution, both countries' IT industries grew from virtually nothing to become multi-billion dollar industries. Korea's computer hardware production topped US$3 billion in 1989, with production of PCs reaching US$1.7 billion. By 1991, Taiwan ranked seventh in the world in computer production and third in exports.
The 1990s have been a different story. putal price competition in the PC industry squeezed the Taiwanese and Korean industries while their own costs were being driven up by rising wages. In this new harsh environment, Korea's industry wilted. Korean PC production dropped by almost 40% in 1992 alone, to just US$834 million, while exports declined by over 50%. Taiwan, however, continued to flourish. Hardware production reached US$7.8 billion in 1992 as PC production reached US$2.1 billion. In 1993, Taiwanese companies produced 24% of the world's portable computers, or 861,000 units.
Why have Korea's computer makers struggled unsuccessfully in the 1990s while Taiwan's have continued to thrive? Three reasons stand out...