Designing Strategy for Technology Acquisition In Nigeria: Lessons from South Korea

Designing Strategy for Technology Acquisition In Nigeria: Lessons from South Korea

Part I: Introduction The miraculous economic transformation achieved by most of the Newly Industrialising Countries (NIEs) came on the back of carefully designed technology acquisition strategies. At the time they embarked on technical change, some of them were at the same level of development as Nigeria measured by their per capita income. South Korea was a case in point. In 1961 when South Korea set out plans to industrialise, her per capita income was $93 while Nigeria’s was $97. Although Nigeria took steps towards industrialisation at about the same time as South Korea, the latter is now in the top five manufacturers in the world. Nigeria’s story has not been that successful. In 2019 Nigeria’s per capita income was under $2,000 while that of Korea was over $31,000 in the same period. On reflection, one can ask- what lessons can Nigeria draw from South Korea’s experience? Part II of this article briefly narrates the amazing story of Samsung’s acquisition of microwave oven technology. In Part III, several aspects of South Korea’s strategies that brought them success are examined and lessons for Nigeria drawn; Part IV deals with the concluding remarks.

Part II: Samsung and the Microwave Oven

The compelling story of how South Korean giant, Samsung, acquired the microwave oven technology was told by Ira Magaziner and Mark Patinkin in their book, The Silent War. A brief account of this story is provided below. The technology for the microwave oven was pioneered in the United States in 1940. At the time Samsung’s journey to acquire the technology began in 1976, the microwave had become popularly marketed in the USA and Japan. At this time, South Korea was a third world country. At Samsung, a young engineer named Yun Soo Chu was saddled with the design of the microwave oven. Chu gathered several models of microwave and tried to design a prototype from them. He took apart the oven and tried to figure out how the parts worked. After gaining an understanding, he procured several parts of his prototype from various sources such as plastic vendors, tool makers, etc. He had particular difficulty with the magnetron tube which was the source of the microwave. He eventually bought this from Japan. Chu worked a year of eighty hours per week before he was able to finish his first prototype. When he turned on his prototype, the plastic cavity melted. Several weeks of eighty-hours a week followed. Then, he tested his prototype; this time only the stir shaft melted. By this time, his wife was getting exasperated and called him mad. Chu often agreed with her. It was not until June 1978 that Chu finally finished another prototype that worked. Even though their prototype was still crude compared to the ones made in the USA and Japan, his bosses were encouraged and they started to put together a production line. The production team started making one oven a day, then progressed to two and by mid-1979 when over 4 million units were made around the world, Samsung had made only 1,460. At this point, Samsung then began to make real push for export market achieving a breakthrough first in Panama and much later in the US. Samsung’s yearly production of the microwave progressively increased such that they made 200,000 in 1982, 750,000 in 1983 and over 1 million units in 1984. By 1987 Samsung produced 3.5 million units in 250 separate models for over 20 countries.

Part III: South Korea’s Success Strategies and Lessons for Nigeria

(a) Strong Political Will Samsung’s success was driven by its government. The government of Park Chung Hee that came to power in 1961 had a central goal to industrialize Korea, turning it from an agricultural economy to an industrial one. He set up an Economic Development Board (EDB) whose job was to think about where Korea’s economy was heading, set goals, develop and give incentives to help businesses achieve the desired aim. The EDB also built industrial parks, subsidised utilities, and provided tax incentives for export and low-cost loans for investing in selected new products. Businesses like Samsung met constantly with government, plotting strategies, trading ideas and discussing projects. Most nations put in strong political will at the early stages of technological acquisition. In England, before the Statute of Monopolies 1623 was enacted, the sovereign by royal prerogative allowed inventors to practice their trade in the realm notwithstanding whether the introducer acquired the knowledge by ‘travel or research’ (Carvalho 2005). In the USA, the first Patent Act was enacted in 1790. Petitions for patent were sent to the Secretary of State who, together with the Secretary of War and the Attorney General was saddled with the works of considering the petitions for grant of patents. Similar consideration can be noted in Europe and the Asian Tigers. In the past, Nigeria had embarked on different policy measures aimed at bringing about industrial development. These measures have failed to bring about the desired impact. For instance, the Science, Technology and Innovation Policy 2012 of the Federal Ministry of Science and Technology. The policy is reportedly faced with weak implementation as it has made little or no impact on the Nigerian economy (Oyewale, Adebowale and Siyanbola 2017). A successful implementation of technology acquisition demands strong political will and substantial investment. The government of Nigeria can borrow a leaf from the South Koreans to implement a comprehensive plan for technology acquisition executed with focussed devotion.

(b) Strategic Positioning The South Korean adopted creative imitation as strategy for technological acquisition (Kim 1979). There is a distinction between illegal and legal use of imitation. It is illegal and a theft of intellectual property to make, import or deal in a product covered by patent. It is illegal to counterfeit a product i.e. to make a product covered by a trademark and market the product under the same brand. However, it is perfectly legal to make a knockoff of a product ‘in the absence or expiration of a patent’ (Kim 1979). Furthermore, according to Steven Schnaars (1994) imitation can be categorised as follows: counterfeits or product pirates, knock-offs or clones, design copies, creative adaptations, technological leapfrogging and adaptation to another industry. It is useful to add that patents are granted for a fixed term after which it falls into public domain and is available for use by everyone. Samsung’s microwave story narrated above demonstrates that advancement in the field of technology can be achieved even by working within legal limits by using what is known and available in the public domain. South Koreans went much further by stretching their R&D to establish themselves in the market hitherto dominated by the prime movers. Nigeria can learn useful lessons from the South Koreans. She can adopt creative or legal imitation as part of her overall technology acquisition and development strategy. In agricultural processing for which she has tremendous capacity, she can take advantage of technologies which are no more protected by patents or any other exclusive rights. The need to re-examine our strategic position becomes very apparent when it is considered that a successful company like Hyundai Motors was founded in South Korea in 1967. Within five years of establishment of Hyundai, several automobile companies were established in Nigeria as well. Hyundai has gone on to become a world-class giant, while many of the Nigerian counterparts have had far less success. The same story applies in steel and many other industries. Nigeria’s model of technology transfer seems to remain largely through trade or turnkey projects without any regard for endogenous technology (Adubifa 1988). Transfer of technology through this model is very minimal. Sadly, the same mistakes that have failed in the past are still repeating in Nigeria

(c) Absorptive Capacity Absorptive capacity often called technological capability means “capacity to absorb existing knowledge and in turn generate new knowledge” (Kim 1997). It is a critical stage in technology acquisition and development by a nation. The practical working of this process can be seen from the Samsung’s story of embracing steps taken to understand, operate, improve and expand the technology involved. In order to gain understanding of a specific technology, first of all, it is required to study all available documents. Meaningful push for technology acquisition by Nigeria must embrace efforts in developing absorptive capacity. Capacity acquired by a specific industry should be made to flow between firms in the industry and across the nation. This can be done by establishing effective linking mechanism. South Korea established an extensive network of technical support system to support technology diffusion particularly among Small and Medium Enterprises (SME) (Kim 1997).

(d) Focus on Manufacturing: South Korea as a nation had a consensus that manufacturing would be the road to prosperity. Major corporations with the aid of the government invested heavily in new factories. An engineer at the electronics section was asked if Samsung was planning on buying parts from overseas and assembling them replied to the contrary. Samsung planned on making every part of the colour television themselves including the colour picture tube. What they needed was technical assistance for which contracts were in place. “At Samsung, production is king.” No effort was spared to produce the best. For instance, in the early days of the microwave production, the production manager received the best hand on training in Japan and the U.S. before settling to work. When there was a technical problem relating to a welding of a part, the production manager visited the welding vendor to procure an upgrade the welding process. In order to get the best vendor, the production manager visited thirty out of the available hundred vendors. Nigeria has substantial capability in agriculture. She can start by focusing on large scale agricultural production and processing with the goal of becoming the world’s food basket within a short time. Most countries with advanced technology started with agriculture and from there transferred capacity into other areas.

(e) The invested heavily in education and training South Korea strongly embraced education as a route to industrialisation. By 1966, government spending on education rose than 17 percent (Kim 1997). Even then this formed only a third of the spending on education with the rest borne by the private sector. Specifically, Samsung invested heavily not only on better technology but also in better minds. Young Koreans were sent in waves to American Universities to be educated building up what became the largest engineering pool for a developing country. An American executive visiting Samsung around 1983 recalled seeing dozens of newly recruited microwave engineers admitted that Samsung engineers outnumbered his company’s engineers ten to one! Newly recruited graduates were given further training at the company and sent abroad to acquire hands on training before starting to work. Extra training was given to ensure that the employees are trained to operate at the best in world standards. They acquire world class skills and apply them. Nigeria will need to commit more resources into education and training. In addition, however, once there are clear strategies in place, substantial resources committed by the private sector into education can be better allocated in identifies priority areas such as engineering. Nigeria must also drive toward energy generation, oil and gas refining.

(f) Export Strategy South Korea does not have natural resources to depend on. In order to fund their industrialization efforts, they relied on foreign receipts. They therefore approached export drive as a matter of life-or-death. At Samsung, they were export focussed. In their view, it was too costly to operate only in the local market. Their approach was to study the market and adapt production to suit local taste. In the course of developing the microwave oven, when they started fulfilling foreign order, they lost money, yet they continued. Part of their breakthrough occurred when JC Penny requested Samsung to be used as an original equipment manufacturer (OEM) – a situation that meant they had to design new ovens. Samsung gave their design engineer, Chu, anything he wanted so he can perform (produce). Technicians helped Chu with product quality. The lesson to take away from this is that in the course of product development, the bigger the demand, the better the opportunity not only to improve on the technology and the product, but mass production enables the product to be made at cheaper costs.

(g) Work Ethics One of the factors that helped the South Koreans in the quest for technology acquisition is their intensity of effort. They developed a strong work ethics. From accounts given by Magaziner and Patinkin, in Samsung, they had one unbreakable rule – to deliver on deadline. They worked ‘like a cow.’ The junior workers work eleven hours a day and twenty- seven days a month. Workers see their job as a challenge to personal discipline and integrity. One worker sums it up as “I put my spirit, put my soul into this product.” Working in Samsung is viewed as planting seeds for both company and the country. The engineers work sixty-eight hours a week. Although many of the engineers are exposed to American life, yet they work with Samsung with a passion. According to one of them “If our generation doesn’t work hard, the next generation will suffer.” To one of the Samsung executives, working for Samsung instead of picking up a lucrative American job, gives him a chance to create many more jobs at Samsung. All the workers enjoy Samsung’s drive to be a world player. According to Kim, the Korean’s dynamic energy is determined more by situational factors such as individual commitment, discipline, effective mobility and traits at the national level. All of this combined explains the strong work ethics demonstrated by South Koreans. Although Nigeria appears to struggle at the moment with commitment to work, it is hoped that if the leadership shows a clear direction and commitment towards achieving technological development within set time frames, Nigerians should be able to rally behind such aspirations that will tend to liberate the majority from the clutches of poverty and stagnation.

Part IV: Conclusion It is appropriate to ponder Nigeria’s future in the fact of ever advancing technology occurring around the world. I have examined some of the key strategies adopted by South Korea on her road to acquisition of modern technology and transforming her economy from an agrarian to a technologically advanced one. They were able to achieve this by employing the right strategies, hard work and dedication. The strategies adopted by Nigeria in key areas like agriculture, automobile, steel, energy have so far not delivered advancement in technology. It is time to rethink and adopt strategies that deliver. Nigeria has a range of strategic option to adopt in her battle to acquire technology and win the war against poverty and underdevelopment. The adoption of the options suggested above will go a long way in sparking the light of hope in the face of majority of Nigerians who live below the poverty lines.

Olusegun Oyedepo, LL.M., P.G. IP Cert. (Taught at the Nigerian Law School)