Korean government delayed the introduction of the iPad as much as possible on grounds that it will cause disequilibrium in the innovative and export-oriented economic model of the country.

ANKARA - TEPAV stated that South Korea, which tried to respond to the changing consumption demand via alternative firms that carry out domestic production for domestic markets instead of settling as a net importer, should be assessed as a separate case to exemplify how to use import-substitution in the twenty-first century.

Policy note titled "A Successful Example of How to Use Industrial Policy in the 21st Century: South Korea and iPad" by TEPAV Research Associate İrem Kızılca was published.

The note said that South Korean economy, which constituted a successful example of economic development with its policy experience over the last five decades, strengthened this outlook further on the basis of industrial policy efforts and an innovative approach. Maintaining that while many countries abandoned import-substitution policies, South Korean experience proved that similar approaches can be employed in the short term for the advancement of local industries, the note highlighted the country's strategy in the tablet PC sector. The note stressed that responding to the change and the demand in the tablet PC market, South Korea delayed the importation of Apple's new product iPad for eight months to develop its own technology, gaining share and competitiveness in domestic and global markets.

Introduction of the iPad delayed for 8 months

The note stated that in the process before the tablet PC technology came to the fore, South Korean market was affected considerably by the introduction of iPhones and that the product which had thousands of orders even before its introduction in South Korean markets sold 200,000 units by December 2009. By November 2010, the number of iPhone users reached 1,620,000. Emphasizing the impact of Apple's tablet PC iPad introduced in the US markets in April, the note said that though the wi-fi included iPad model did not require subscription to any GSM operator, the introduction of the product was banned by the Korea Communication Commission (KCC). The note continued:

"Stating that the product included wi-fi connection and thus had to be issued relevant certificates, the officials stipulated that those who used the product illegally shall be punished with imprisonment for three years or pay a US$ 20.000 fine. Nevertheless, these sanctions could not prevent the Apple fans from obtaining the product. Thousands of iPads were sold in South Korea via fiends in the USA or other intermediaries. The wave rapidly spread across Asia. Korean government delayed the introduction of the iPad as much as possible on grounds that it will cause disequilibrium in the innovative and export-oriented economic model of the country. The government wanted to avoid a picture where this innovative product will be to the benefit solely of importers and approved the introduction of the iPad in Korean markets only in November 30, 2010, 8 months after the introduction of the product in US markets."

The Rise of Alternative Products in Korea

The note said that important developments were witnessed in South Korea's tablet PC markets with governments' efforts coupled with the efforts of the firms seeking to earn a share in the relevant market. The note stated that Korea Telecom (KT), the official distributor of iPhone and iPad, introduced the tablet PC the "identity-Tab" sold at a price way below the market rate and that this product was followed shortly by Samsung Galaxy Tab. "As the data for December 2010 suggests, Samsung Galaxy Tab sold 250.000 units and the iPad, introduced on November 30, 2010, sold 100.000 units in the domestic market." said the note and stressed that even though the sales remained below the expectations from the tablet PC market, Samsung Galaxy Tab substantially affected Apple iPad's sales performance in the Korean domestic market.

iPad 2 not introduced in the Korean market

Maintaining that on March 11, 2011 Apple introduced the new tablet PC iPad 2, the note said that though the price of the product was announced in Apple South Korea web page; it was yet not introduced yet as of April 2011. The note stressed that meanwhile; Samsung announced that its new tablets PC Galaxy Tab 8.9 and 10.1 were on the way.

The note pinpointed that with the rising popularity of tablet PCs and the introduction of new models, South Korea turned to support domestic firms in terms of their production and competitiveness capacity first in the domestic and then in the international market and concluded:

"This way, domestic producers became competitive in the global market and earned a significant share in the tablet PC market. On the other hand, how protectionism and international competitiveness can work simultaneously requires specific attention."