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Can Korea lead the Commercial Drone market?

Can Korea lead the Commercial Drone market?

Korea has once again topped the Bloomberg Innovation Index, which scores economies using factors including R&D spend, the density of high-tech companies and patent activity. The drive to become leaders in innovative technologies is illustrated by Korea’s recent plans with regards the commercial drone market.

Commercial drones are a major global growth sector, with the market expected to expand rapidly from $7 billion in 2016 to over $21 billion by 2022. In fact, a recent PwC report values the addressable market at $127 billion, indicating that there is much room for further growth.

The commercial drone market in Korea is still in its infancy, currently worth $2.6 million. The Korean Ministry of Science, ICT and Future Planning (MSIP) ranks the market seventh in the world. Not content with this position, the MSIP has announced its intent to turn Korea into a leader in the global commercial drone market.

The Korean government is backing up this claim by relaxing regulations and actively promoting the development of the commercial drone market through research grants and public-private partnerships. By 2019, the government aims to inject $428 million in combined public-private investments, with the goal of growing the overall Korean drone market to $1 billion by 2020 and $3 billion by 2025. One example of these investments is drone software, where the MSIP is investing $4.3 million to develop flight control computer, task control computer and failure diagnosis software together with the Korea Aerospace Research Institute (KARI) and Electronics and Telecommunications Research Institute (ETRI).

Ahead of simplifying drone permit regulations, the Korean government is carrying out trials in eight sectors of strategic importance for drone use, including transportation, land surveying, and communications network provision, with the objective of establishing safety standards and business models,

15 universities, research institutions and private corporations are currently carrying out trial services throughout the country through to 2019. For example, CJ Korea Express and Hyundai Logistics are testing package delivery via drones, LX started a drone land surveying trial service, and KT is using drones as mobile emergency LTE base stations.

Deregulation, public/private investments and expanding commercial trial services are starting to produce effects, with registration statistics showing strong growth in the commercial drone market. 2016 saw an 84% increase in the number of commercial drones registered with the Ministry of Land, Transport and Maritime Affairs when compared to 2015. Likewise, both the number of drone operating companies and individual certified operators have increased significantly since the Korean government first began regulating the commercial drone market in 2012.

While Korea’s goal is clear, the country will require significant further efforts to catch up to leaders in drone technology such as China, Israel and the United States. For foreign drone technology companies, this means there are licensing and joint development opportunities, along with a rapidly expanding end user market.

Companies entering the market early should be well positioned once the use of commercial drones in Korea becomes widespread. DJI, for one, the world’s largest vendor of leisure and commercial drones with a global market share of around 70%, is banking on the Korean market and opened a flagship store in Seoul in March 2016, the company’s first flagship store outside China. As deregulation progresses and the scope of commercial drone applications expands, DJI’s example is sure to be followed by other foreign vendors.

About the Author

Johannes Nanz

Johannes, a Project Manager in our Korean office, is fluent in Korean and a specialist in intellectual property issues.

Originally from Germany, Johannes holds an MBA from Sungkyunkwan University and an LL.M. degree from Maastricht University. Prior to joining Intralink, he consulted for Korea Telecom (KT) and was instrumental in securing overseas contracts and winning multiple industry awards. Johannes further worked as a Researcher for the University of Bonn, where he researched international trade, investment and intellectual property law between Korea and the EU.

If you think Johannes could help with your business, contact him on johannes.nanz@intralinkgroup.com

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