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Nanotechnology development encompasses a wide range of industries, from electronics to medical devices.

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This 10-part series looks at key potential growth areas around the world.

One of the world's smallest technologies is driving big innovations in Japan and South Korea – and creating opportunities for domestic and foreign companies and investors.

Nanotechnology, a subfield in advanced manufacturing that produces technologies less than 100 nanometres in size (a human hair is about 800 times wider), is a burgeoning industry that's projected to grow to about $135-billion in Japan by 2020. South Korea's government said it is aiming to boost its share of the sector to 20 per cent of the global market in 2020.

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Nanotech applications in these two countries cut through a broad swath of products and industries, from automotive and electronics to environmental technologies and health care.

"Japan and Korea are active markets for nanotechnology," says Mark Foley, a consultant with NanoGlobe Pte. Ltd., a Singapore-based firm that helps nanotech companies bring their products to market. "Japan is especially strong on the research side and [South] Korea is very fast in plugging nanotechnology into applications."

Andrej Zagar, author of a research paper on nanotechnology in Japan, points to maturing areas in Japan's nanotechnology sector: applications such as nano electronics, coatings, power electronic, and nano-micro electromechanical systems for sensors.

"Japan's IT sector is making the most progress as the implementations here are made most quickly," says Mr. Zagar, who works as business development manager at LECIP Holdings Corp., a Tokyo-based company that manufactures intelligent transport systems for global markets. "As Japan is very environmentally focused, the environment sector in nanotech – fuel-cell materials, lithium-ion nanomaterials – is worth focusing on."

Patent statistics suggest accelerated rates of nanotech-related innovations in these countries. According to StatNano, a website that monitors nanotechnology developments in the world, Japan and South Korea have the second and third highest number of nanotechnology patents filed this year with the United States Patent and Trademark Office.

As of September, Japan had filed close to 3,283 patents while South Korea's total was 1,845. While these numbers are but a fraction of the United States' 13,759 nanotech patents filed so far this year, they top Germany, which has only 1,100 USPTO nanotech patent filings this year, and Canada, which ranks 10th worldwide with 375 filings.

What's driving the growing nanotechnology markets in Japan and South Korea? Governments in both countries have identified nanotechnology as key priority areas. In Japan, home to a significant breakthrough on carbon nanotubes (cylinders of carbon atoms that have extraordinary strength and other properties), the government has spent about $800-million (U.S.) each year on nanotechnology R&D since 2001. It intends to spend millions more in the years ahead on advanced IT and manufacturing, next-generation energy nanotechnology, and on innovations that can prevent and mitigate natural disasters and accidents.

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In South Korea, the rise of nanotechnology can be traced back to 2001, when the South Korean government launched its nanotechnology development plan, along with $94-million in funding. Since then, South Korea has poured more money into nanotechnology. As of 2012, it had invested close to $2-billion in nanotech research and development.

The South Korean government has also identified 30 "future technologies" for development. These range from nano memory devices and nano-based foods to nano medical diagnoses and nanostructured solar cells. The country's Ministry of Knowledge Economy recently announced a joint public-private partnership investment of about $860-million to boost South Korea's nanotech industry.

The money, which will come from national and municipal governments as well as private companies, is intended to advance the South Korean government's goal of turning the country into the world's third largest nanotechnology producer in terms of market share.

"[South] Korea is a lot more dynamic than Japan – faster to commit money and form partnerships," says Mr. Foley. "Japanese companies tend to be very slow, everyone is trialling potential applications. But even though they're slow, they're doing very high quality work, so investors need to be patient."

Mr. Foley says bringing products from the lab to market has become a bit of an issue in Japan. This is where partnerships with foreign companies could be useful.

"Japan has always had great technology and engineering but they fall down on the marketing side," he says. "They may need help from outside to go to market – there's been a bottleneck for five to 10 years now."

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The nanotechnology sectors in Japan and South Korea are a mix of a few large organizations and many small companies. In Japan, for instance, where the government has invested about $800-million a year in nanotechnology since 2001, the world's largest producer of carbon nanotubes, Showa Denko KK shares market space with the likes of GeneLite Inc., a small Tokyo company that, among other things, makes lighting that uses nanomaterials.

A number of foreign companies are also among the key players in Japan and South Korea's nanotech sectors. These foreign-owned entities include Finland's Carbodeon Ltd. Oy and the Britain's Oxford Instruments PLC in Japan..

Mr. Foley says nanofibres and smart clothing are particularly hot areas in Japan these days. Nanofibers have broad applications and can be used in water and air filtration systems. He points to Toray Industries Inc. and Teijin Ltd. as leaders in advanced fibre technology.

"We've also seen advances in smart clothing in the last year or two, with clothing that can conduct electricity and measure things like heart rate, body temperature and sweat," he says. "Last year, a sporting company in Japan released smart clothing based on Toray technology."

As the nanotechnology industry continues to gain traction on a global scale, Mr. Foley says Japan and South Korea may have a hard time holding on to their top spots in the international market; China is moving up fast from behind.

"Top Chinese researchers from Harvard and Cambridge are returning to China, where in Suzhou City they've built a nanocity with over 200 nanotechnology-related companies," he says. "The China market is so huge that the most of the Chinese nanotech companies are focusing just on the domestic market, but in 10 years' time, they'll be big enough to go global."

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