At 5.50am every morning, the sun begins its gradual ascent over Inwangsan’s northwestern face, the mountain’s gentle incline offers a perfect view of Seoul as the city begins to stir and wake for the new day. The Seoul skyline is different from others. Unlike New York City or Tokyo, the city’s profile is wave-like and rugged; seemingly a geographical manifestation of the creative and industrious nature of its people.
Miracles On Water
Following the Korean War, South Korea began as an agriculture-based economy in the 1960s, despite only having 30 per cent land area available for cultivation. Recognising its massive reliance on the industry, the country turned to an economic model in the coming years of substituting foreign import with domestic production and manufacturing, devoting profits generated during this time to the construction of physical infrastructure.
The astonishing economic development of Korea is famously dubbed ‘The Miracle on The Han River’, modelled in name after West Germany’s ‘Miracle on The Rhine’ in the 1950s. It is another body of water, however, that has played perhaps a more influential role in South Korea’s rapid development. Had it not been for the Han’s geographical fortune of flowing through Seoul, ‘The Miracle at the Port of Busan’ would’ve been a more fitting, albeit less-catchy name for the country’s post-war economic triumph.
The Nakdong River flows from the Taebaek Mountains in the northeast to the southern tip of the Korean peninsula, as the river empties out into the Korea Strait. At its mouth lies the Port of Busan, the sixth-busiest port in the world. First established as a Japanese-exclusive port in 1876, trade running through its waters have been the lifeblood of Korea’s gargantuan export capability for decades. As of June 2022, South Korea has reportedly exported a whopping 57.7 billion USD worth of trade, with the Port of Busan facilitating over 75 per cent of container cargo that enters or exits the country.
Change In Weather
Korea’s top exports are manufactured electrical machinery and equipment, with the outgoing trade of integrated circuits alone worth 89.9 billion USD annually. Through manufacturing software and hardware, the country has established itself as an economic powerhouse with a technological edge. Large conglomerates such as Samsung and the LG Group have traditionally dominated the technological sphere, but a growing digital revolution in the form of next-generation industries such as payment technologies and fintech have shifted the industry’s focus.
This has accelerated the demand for digital infrastructure, providing opportunity for the data center market to grow in the country. Coupling this with one of the best tech infrastructures worldwide and a foreign investment-friendly market, Korea has been easy-on-the-eye and enticing to companies such as Digital Realty and China Telecom, with facilities sprouting across the country and blueprints for more in place.
Interrupting the bright optimism surrounding the industry’s future in South Korea however, have been global supply chain issues. In a time of global inflation and growing uncertainty, the thriving popularity of the sector has spread its logistical network thin, with the sourcing of raw materials, manufacturing of equipment and shipping pushed towards full throttle.
External influences such as Covid-19 and the Russo-Ukraine conflict have further complicated an already-stretched supply chain, from the lack of parking space for container ships to a decade-high global price on steel. Data center companies have reported being 14 per cent over budget due to increased labour and component costs, with hardware vendors reportedly increasing costs by 7 to 12 per cent since the beginning of 2022. Delays have also been observed, with generator shortages and core networking equipment taking as long as seven months to be shipped.
The pinch has also been felt in Korea. As recently as June, the waiting time for export container ships at the Port of Busan swelled to 11 days, as compared to the normal median of three. Despite being a producer of electronic equipment, much of the raw materials needed for data center related-production is imported from China, where recent Covid-19 lockdown measures have ground the country to a halt.
Complete immunity is never granted to any industry nor country; careful planning and contingency measures have to be employed to deal with unfavourable conditions. Singapore announced plans for a 40-billion USD automated port project this June- the world’s largest when completed by 2040. Hong Kong has recently adopted the clever solution of addressing space constraints in the data center market by retrofitting existing industrial buildings.
In a fervently competitive environment, innovation and perseverance will continue to be essential ingredients in South Korea’s keeping up with the times. The Korean people’s uncanny ability to create solutions and strive forward in adversity will lead to continued success, but the road ahead is challenging and abrasive.
Relying On Reality
Akin to the idea of fresh talent bursting onto the scene in the world of sport, the world heaps praise on Korea for its stunning growth within the last 60 years, with ‘The Miracle on The Han River’ always within earshot. The notion of natural talent is sexy, attractive and seductive. The incredibly unromantic reality behind any form of success however, is perseverance and determination. South Korea’s journey to prosperity has been one of intelligent decisions, hardwork and spirit- anything but a miracle.