Korea’s R&D Investment Is Heavily Reliant on Large Corporations

According to the Korea Institute for Industrial Economics & Trade (KIET) on March 25, merely 70 South Korean companies put their names on the EU Industrial R&D Investment Scoreboard in 2016 whereas the number amounts to 822 for the United States, 376 for China, 365 for Japan and 134 for Germany.

Besides, Samsung Electronics, LG Electronics, and Hyundai Motor Group accounted for no less than 62.7% of the total R&D investment of the 70 South Korean companies, which means South Korea’s R&D activities were led by a small number of large corporations. The reliance in the electronics and automobile industries amounted to 92.7% and 88.6%, respectively.

The KIET explained that the rest in the electronics industry is divided into 2.8% by small and medium-sized enterprises and 4.5% by venture firms. For reference, large and smaller companies account for 2.6% and 98.3% of the same industry in terms of number.

In the automobile industry, Hyundai Motor Group and major auto parts manufacturers represented 88.6% of the total R&D investment in 2015. In addition, the ratio of finished vehicles to the total R&D cost was as high as 74% whereas that was 66.2% for Germany, 68.4% for Japan and 72.7% for France.

“R&D investment by South Korean companies showed an average annual growth of more than 7% from 2010 to 2015 and, as a result, they ranked fourth in total R&D investment and second in R&D investment-to-GDP ratio among the 34 members of the OECD,” the KIET explained, adding, “In contrast, they stood at 28th in technology exports-to-R&D ratio and 33rd in the number of SCI papers per researcher.”