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Korea’s presence in tech R&D shrinks as China rises

By Song Su-hyun

Published : March 2, 2021 - 15:42

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South Korea’s share in global research and development spending in technology has waned as China’s is rapidly rising, a comparative report by the Federation of Korean Industries showed on Tuesday.

The number of Korean companies that made it to the list of leading 2,500 corporate investors in R&D plunged from 80 in 2014 to 56 in 2019, the report revealed.

The Korean firms’ share in the total value of R&D investments also shrunk from 3.9 percent to 3.6 percent during the same period.

The FKI report is based on an analysis of major R&D firms on EU R&D Scoreboard since 2011.

“Korea’s R&D spending was too concentrated on ICT products including semiconductors, and the country relied heavily on a particular company,” the FKI said in the analysis.

Nearly 60 percent of the Korean companies included in the 2,500 R&D firm list were ICT product manufacturers. Samsung Electronics accounted for 47.3 percent of the country’s total R&D investments value in 2019.

The organization noted, while Korea’s status was on the wane in the global R&D sector, China’s investments surged during the same period, especially after the Chinese government announced its policy to boost the technology sector in 2015.

The number of Chinese firms on the 2,500 companies list was 56 in 2011, but soared to 536 in 2019.

Those companies’ R&D investments grew 30.8 percent annually on average, pushing China past Japan to become the second largest R&D investor in the world in 2019.

Korea’s investments in emerging sectors like ICT services and health care were far less than those of Japanese and Chinese firms, the FKI pointed out.

Chinese and Japanese companies accounted for 23 percent and 17 percent each in value of R&D investments in the new sectors, while Korean firms’ share was 4 percent in 2019.

“Korea may have caught developed countries in the ICT manufacturing sector, but it has a long way to go when it comes to the services sector,” commented Kim Bong-man, director of international cooperation at FKI.

“The country needs to refrain from introducing regulations that undermine companies’ competitiveness and fuel an anti-business sentiment, while improving tax incentives for companies that increase R&D investments in new sectors.”

By Song Su-hyun (song@heraldcorp.com)