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Good practice Imported

Smart Manufacturing Innovation Initiative — Korea's Co-Financed Smart Factory Programme for SMEs

South Korea · Sejong · See the South Korea profile · See the Sejong profile

Evidence: Observational / pre–post Top 27% 76/100 · Ask Evidence Copilot about this practice

South Korea's long-running national scheme co-finances manufacturing SMEs to install smart-factory systems — automation, data and process control; independent trade press documents double-digit productivity, quality and cost gains at named firms.

15.5 %
Average production cost reduction (cumulative to date)
28.5 %
Average productivity gain (cumulative to date)
42.5 %
Average quality improvement (cumulative to date)
6.2 %
Fall in workplace accidents (cumulative to date)
2.6 employees
Additional employees per participating firm (cumulative to date)
450 projects
FY2026 further projects planned (FY2026)

Details

Maturity
Established
Promoter
Ministry of SMEs and Startups — Korea Smart Manufacturing Office (KOSMO)
Period
2014–present
Keywords
manufacturing, smart factory, Industry 4.0 automation, SME productivity, AI adoption

Context

Since 2014, South Korea's Ministry of SMEs and Startups has run a national scheme to help manufacturing SMEs install 'smart factory' systems — automation, real-time data collection and process-control software — through the Korea Smart Manufacturing Office (KOSMO).

Objectives

The programme aims to raise manufacturing SME productivity, quality and safety by co-financing digital and automation adoption alongside contributions from large partner firms and local authorities.

Activities

The programme co-finances adoption costs, pairing capital subsidy with technical guidance from larger manufacturers. The Ministry's FY2026 Smart Manufacturing Innovation Support Program, announced 31 October 2025, will fund roughly 450 further projects — 30 'Autonomous Factories', 400 AI-specialised smart factories and 20 large-firm/SME cooperation tracks with an AI focus.

Results

Independent reporting by Korea Economic Daily's English-language arm, KED Global, documented firm-level results including average production cost reductions of 15.5%, productivity gains of 28.5%, quality improvements of 42.5%, a 6.2% fall in workplace accidents and an average of 2.6 additional employees per participating firm, alongside named case studies: Hwashin Precision reduced staff turnover among younger employees to zero after adopting smart-factory systems; Aju Steel reported zero accidents after automating stock and shipment tracking and later relocated production from an overseas plant back to Korea; Samhyun hired 80 young workers over three years after upgrading its systems.

Conclusions

Historical cumulative totals beyond these figures (e.g. total firms supported since 2014) are reported in secondary sources but could not be independently verified against a directly accessible primary document, so are not included here.

Implementation
Indicative cost
Medium (€50k–€500k)
Time to results
Long (> 3 years)
Staffing & skills
Run by the Ministry of SMEs and Startups through the Korea Smart Manufacturing Office (KOSMO), Co-financed with contributions from large partner firms and local authorities, which also provide technical guidance to participating SMEs

Conditions for success

  • Pairing capital subsidy with hands-on technical mentorship from larger manufacturers, not just a cash grant
  • Sustained decade-plus government funding commitment allowing firms to plan multi-year adoption

Where it fits

Governance type
national government programme
Scale
national
Income level
high-income

Commonly funded by

National / regional programmes

Indicative funding routes for practices of this type — always check each programme's current calls and eligibility rules.

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Data sources

Where this practice's information was retrieved from, and when.

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