For decades, South Korea's large family-run conglomerates, or chaebol, have been the mainstays of the economy. But suddenly in the last couple of years, high-tech companies have burst onto the scene thanks to visionaries such as Lee Min Hwa. The workaholic Lee, 47, practically engineered Korea's venture business boom, pressing Seoul to enact a raft of new laws to support fledgling high-tech startups and allow venture-capital firms to flourish. As a result of Lee's efforts, Korea now has more than 7,000 such companies, the highest number in the world outside the U.S., compared with a mere 250 before Lee started the Korea Venture Business Assn. (KOVA) in 1995.
In addition, Lee's efforts helped prompt the establishment of a second, technology-oriented bourse in Korea, the Kosdaq. Back in 1995, Lee authored a report on how Kosdaq would benefit Korea's economy, and then spent three months lobbying the government to pressure the Korean Securities Assn. to set up such a bourse. The Kosdaq, which is modeled on the U.S.'s Nasdaq and started trading in 1996, has fulfilled Lee's goal of offering another way for cash-starved high-tech companies to tap into new sources of funds. "Korea couldn't wait 50 years for the industry to develop, like it has in the U.S.," says Lee. "We needed to provide some infrastructure."
Lee's lobbying efforts have prompted the deregulation of the venture-capital industry. He himself set up one of Korea's first specialized venture-cap company, Terasource, which is now the country's third-largest. Since then, venture-capital firms have blossomed from 40 in 1996, to 151 today. The situation is improving, says Lee, but "Korea still needs more specialized venture-capital companies."
Lee's desire to set up the Seoul-based KOVA was born of his own frustrating experience trying to start up a company. Some 10 years earlier, while researching ultrasound machines for his PhD thesis in electronics at a local science institute, he wanted to try to manufacture his own machine. "I couldn't persuade anyone to invest in the project," says Lee. So he got together six other engineers and pooled $50,000. The result was Medison Co., which set up in 1985 and began manufacturing Lee's ultrasound machine in 1987. Ten years later, Medison engineers had developed the world's first three-dimensional ultrasound. Now, Medison is Korea's largest medical-equipment manufacturer, with annual sales of $185 million. Medison competes with Siemens and Toshiba Corp. in ultrasound manufacturing and magnetic resonance Imaging. The company employs 340 people in its Seoul headquarters, and has 1,500 employees in affiliates around the world.
TWO HATS. As chairman of Medison, Lee was swamped with requests from engineers he met who wanted to start their own high-tech companies but didn't know how to come up with the funding. "They were asking me what they should do to overcome their financial problems," he says. So Lee put together another group of people to pool their money--this time 17 other high-tech entrepreneurs who together contributed $100,000 and set up the KOVA. The association now boasts some 1,050 members and provides networking opportunities, as well as lobbies on behalf of small business. Lee's proudest achievement, he says, is a new law that allows professors and students to start their own companies in university labs--and hold onto the profits.
Between his two hats at Medison and the KOVA, Lee logs about 100 working hours a week. When asked about outside hobbies or interests, he answers, laughingly, "work." But he does spend time with this three daughters and play the occasional game of Go. A self-described optimist who "likes challenges," Lee oversees Medison's charitable donations--ultrasound equipment--to North Korea.
Lee predicts that as a result of the changes he has made in Korea's business climate, the country will have 43,000 high-tech companies by 2005, accounting for up to one-quarter of Korea's economy. With all that activity going on, he believes, the days of dominance for the lumbering chaebol will finally be numbered. "They can't be the driving force for the New Economy," says Lee. "Small companies have a definite advantage over large companies in a knowledge-based economy." Spoken like a true high-tech visionary.