Korea's Smart Factory Programme — Subsidised Automation Adoption for Manufacturing SMEs

Launched in 2014 by South Korea's Ministry of SMEs and Startups and administered through the Korea Smart Manufacturing Office (KOSMO), the Smart Factory programme co-funds adoption of IoT, data-collection, automation and AI tools by manufacturing SMEs, tiered from basic digitisation to advanced smart-factory conversion.

Support has reached more than 24,000 manufacturing SMEs across over 32,000 projects.

Government survey data (Ministry of SMEs and Startups, via a Korea Federation of SMEs poll of converted firms) reports average production-cost cuts of 15.5%, productivity gains of 28.5%, quality improvements of 42.5%, about 2.6 additional employees per firm and a 6.2% reduction in industrial accidents; 15.1% of surveyed firms reported increased employment after conversion. An independent, peer-reviewed evaluation using propensity-score matching on more than 7,000 SMEs that completed conversion in 2019-2020 corroborates the direction and scale of these effects — +29% productivity, +42.1% quality, -35.2% unit costs, +11.3% sales and +2.1 full-time-equivalent jobs per firm one year after implementation.

Other academic reviews of the same policy family caution that measured gains cluster at the process level (defect rates, lead times, unit costs) and that effects on broader firm profitability are harder to detect within short observation windows of roughly two years. Reshoring cases such as Aju Steel Co. illustrate the qualitative story but are anecdotal rather than representative.