Unusual Trend
Korean companies are found to be lagging behind major countries when it comes to increasing research and development (R&D) investments and R&D spending is highly concentrated among the top companies in Korea, according to a survey.
According to the results of the analysis by the Federation of Korean Industries on the national status of R&D investment of the top 2,500 global companies as of the end of December 2021, the concentration of R&D investment in Korea was higher in its top companies compared to major countries such as the G5 (U.S., Japan, Germany, France, U.K.) and China. The R&D investment of Samsung Electronics, the largest company in the nation, alone accounted for 49.1 percent of the total R&D investment of all Korean companies. The combined R&D spending of the top five companies, including Samsung Electronics, SK hynix, LG Electronics, Hyundai Motor, and LG Chem, made up a significant 75.5 percent of the total.
The concentration level of R&D investment for the top company by country was 21.7 percent in the U.K., 19.8 percent in France, 17.1 percent in Germany, 10 percent in China, 7.6 percent in Japan, and 6.3 percent in the U.S. All of these percentages were significantly lower than Korea’s. Similarly, The proportion of investment by the top five companies was 23.7 percent in the U.S., 22.2 percent in China, and 26.1 percent in Japan.
Among the top 2,500 companies, U.S. companies and Chinese companies accounted for 32.9 percent (822 companies) and 27.1 percent (678 companies), respectively, accounting for 50 percent of the total. Korean companies accounted for 2.1 percent of the total with 53 companies, ranking 9th out of 41 countries.
The R&D investments of the top 2,500 global companies at the end of 2021 rose by 16.9 percent to approximately US$1.2032 trillion (1,546 trillion won) from the end of 2020. U.S. companies had the largest share with about US$483.7 billion, accounting for 40.2 percent of the total. The R&D investments of Korean companies was approximately US$37.7 billion, making up 3.1 percent of the total, ranking 6th out of 41 countries.
The total investments of Korean companies increased 1.7 times from US$21.8 billion to US$37.7 billion from the end of 2013 to the end of 2021. In contrast, those of China increased 9.6 times from US$24.4 billion to US$215.5 billion, and that in the U.S. increased 2.3 times from US$212.9 billion to U$483.7 billion.
The proportion of R&D investments in Korea’s Gross Domestic Product (GDP) was 2.1 percent at the end of 2021, showing a growth of 0.5 percentage points from the end of 2013. China rose by 1.2 percentage points during the same period, while the U.S. and Germany grew by 0.8 percentage points each and Japan increased by 0.7 percentage points.