The Korean government has spent a lot of money to make Pangyo Techno Valley into Seoul’s top tech cluster. Pangyo Techno Valley was built in 2012 to create a Korean innovation hub similar to Silicon Valley. Now in 2024, there are over 1,700 companies, with over 92% in high-tech industries. They have a combined revenue of over $100 billion. Large corporates helped with this as more and more have come to Pangyo. Therefore Pangyo Techo Valley is not just a startup hub but also a major industrial hub in Korea employing over 70,000 people. It is a hot spot for software engineers, programmers, graphic designers, and developers.
Why Move to Pangyo Techno Valley?
What makes Pangyo so attractive is just how close it is to Gangnam. There is even an express subway line to Pangyo from Gangnam takes around 20 minutes. This is why it is home to major gaming companies like Nexon and NCsoft, biotech firms like Medisoft and SK chemical, Sk Telecom Co, Hankook Tire & Technology, and Korea’s top messaging app Kakao. Many of the new entrants into Pangyo Techno Valley are in diverse industries that range from telecoms to manufacturing, and their operations in the tech hub are mainly for R&D.
The industries in Pangyo Techno Valley are broken down below:
- 65% IT industry
- 14% Biotech industry
- 13% Cultural technology industry
- 8% Other
Pangyo Techno Valley has also gotten interested in foreign companies and startups. Global companies looking to work out of Pangyo Techno Valley should look at the pros and cons we laid out here. Every company is different, so it is essential to weigh your options.
Pangyo Techno Valley – Pros vs. Cons
The Pros
Pangyo saw its population increase by over 50% from 2018-2021. Pangyo has attracted a lot of Seoul residents to move out to Pangyo mainly to invest in real estate and get away from the busy city life that Seoul brings. Currently, they have a population of just under 160,000. In addition, the area has become the epicenter for young foreign entrepreneurs. This was due to the Ministry of SMEs and Startups hosting a program called the K-Startup Challenge that brought in many foreign startups in 2021 and will do so again in 2024. They helped them set up their business in Pangyo, which only took 5-7 days on average.
As Pangyo grows, they are attracting more foreign companies that wish to enter Korea and the Asian market as a whole. The hottest sectors are startups dealing with AI, Fintech, and BioTech. The main reasons for coming to Korea are their speedy production, innovative environment, and cheap yet reliable manufacturing. Korea has developed a strong reputation for having the world’s best internet connection and some of the most innovative hardware. Therefore another strong selling point for Korea is a very tech-savvy customer base and early adopters of the latest tech.
The Cons
Similar to Silicon Valley, one of Pangyo Techno Valley’s main issues is the high rent cost. While there is a fast connection from Pangyo to Gangnam, Gangnam has the highest living cost in Korea. Therefore, finding workers willing to commute to Pangyo or live in Pangyo has been difficult. There has also been a sharp increase in coworking spaces in Seoul, and in 2020, many startups decided to work there rather than in Pangyo. Many who are moving out to Pangyo are rich Koreans who wouldn’t mind the high rent costs.
Relocating to Gangnam seems to have more benefits than staying at Pangyo for foreign startups. It is much easier to set up meetings in Gangnam and meet investors. Furthermore, some of the best talents are in the city. That is the real issue. Therefore, since 2020, most companies moving into Pangyo have been mainly large corporations like SK Telecom, Hankook Tire, and big BioTech companies. This is the opposite of what Pangyo Techno Valley was aiming to do. Instead of creating a trendy tech hub, they have created an industrial hub.
The Future of Pangyo Techno Valley
If the Korean government wants to continue to support Pangyo, they have two options. They need to give rental support to these foreign startups. Or lower the office rental fees in Pangyo. Currently, there is no real difference in the price of office spaces in Gangnam and Pangyo. Therefore why would a startup move out to Pangyo? If the Korean government does not do anything about the rent in Pangyo, Pangyo Techno Valley could fail.
Another option might be to make Pangyo Techno Valley into the Gaming Hub of Korea. Most of the top gaming companies are located in Pangyo and for gaming startups, it will be great to have a cluster of gaming companies in one location. Esports tournaments can be held there and attract the top gamers and companies to Pangyo. There is no real benefit for other tech startups to work out of Pangyo. The Korean government should let the market dictate what Pangyo Techno Valley should be. The market shows that Gaming companies are striving, so their focus should go to that sector.
Additional Features of Pangyo Techno Valley
Korean AI Ecosystem
The Korean government has been entirely on board with creating a strong AI industry in Korea. They realize the importance of AI and the possibilities of AI thanks to the development of 5G technologies in Korea. This is why Pangyo Techno Valley has been focusing so much on AI and has formed an AI cluster to help AI startups in Korea go global. This means they will bring global AI startups to Korea through Pangyo. The ultimate plan is to convert Pangyo Techno Valley into an innovative AI cluster that connects to ICT (Information Communication Technology) and Bio-Technology. Gwangju Metropolitan City will invest over $330 million in the next five years to create an AI-based scientific technology startup complex.
AI-Based Self-Driving Center
The AI-based self-driving center in Pangyo Techno Valley is the hub for Korean startups researching, developing, and testing autonomous driving and 5G technology. Korea hopes to be the leader in perfecting autonomous driving and developing new technologies for commercial use. Currently, self-driving cars are being tested on the public roads of Pangyo. It is expected that a Korean company will be able to achieve a level 5 autonomous driving level by the end of 2022.
AI Graduate School
KAIST, the top technical institute in Korea, set up an industry-university collaboration center in Pangyo. In addition, KAIST, Korea University, and Sungkyunkwan University have been selected to run government-funded graduate schools that will specialize in teaching and developing AI technology. The Korean government will invest $8 million for the next five years to support these three Universities. After conducting performance evaluations, they plan to invest a combined $16 million in the next ten years.
The three universities have already opened up AI-related master’s and doctorate programs. Korea University will also focus on healthcare and self-driving technology, which can incorporate AI technologies. Sungkyunkwan University has hired 15 professors who have experience specializing in AI software and hardware. These universities have already partnered with many Korean enterprises, including Samsung.
Global Acceleration Center for Startups
The Xinova-GBSA Global Acceleration Center has been built, and ten startups have already moved in. Xinova has been awarded the contract for managing the center. The Xinova-GBSA program aims to help startups in Korea enter the global market. They will look to leverage their extensive worldwide network and open innovation model to help their startups go global and connect them with collaborative partners.
