Thanks to the booming export of Hallyu content such as dramas, movies, and webtoons, South Korea’s trade balance in intellectual property rights achieved its largest annual surplus in history last year.
According to statistics released by the Bank of Korea (BOK) on March 20, the provisional trade balance in intellectual property rights for the year 2023 amounted to a surplus of US$180 million.
The trade balance in intellectual property rights is a distinct category within the current account, specifically tracking international transactions related to intellectual property. When royalties are received, it’s considered exports, whereas when royalties are paid, it’s counted as imports. The trade balance in intellectual property rights recorded its first surplus of US$160 million in 2021, followed by a deficit of US$1.11 billion in 2022. However, it returned to surplus again in 2023.
When categorized by type, the trade balance in industrial property rights recorded a deficit of US$1.86 billion, primarily centered around patents and utility model rights, which amounted to -US$700 million, and trademarks and franchise rights, totaling -US$1.17 billion. This represents a reduction in the deficit compared to the previous year, which was -US$2.62 billion.
Moon Hye-jeong, the head of the BOK’s balance of payments team, stated, “With the expansion of overseas factories and the increase in domestic product demand, exports of patents and utility model rights to overseas local subsidiaries of domestic major companies, particularly in the automotive and secondary battery sectors, have significantly increased.”
The copyright balance recorded a surplus of US$2.21 billion, expanding from the previous year’s surplus of US$1.74 billion. Within copyrights, cultural and artistic copyrights, including music and videos, reached a surplus of US$1.1 billion, setting a new record high, while music and video copyrights alone contributed US$950 million. Research and development (R&D) and software copyrights showed a surplus of US$1.11 billion. Among R&D and software, the computer program sector, including games, narrowed its deficit to US$2.12 billion from US$2.21 billion the previous year.
Moon said, “Amid steady demand for South Korean cultural content, the expansion of overseas performances and events after the COVID-19 endemic has resulted in the highest surplus ever recorded in cultural and artistic copyrights. Despite the downturn in the gaming industry, the surplus in software copyrights expanded due to increased exports of domestic computer programs for IT support to overseas subsidiaries of major domestic companies.”
When examining trade balances by institutional type, large domestic enterprises achieved their highest-ever surplus, totaling US$6.07 billion annually. This surge is credited to the increased export of patents, trademarks, and software copyrights. In contrast, small and medium-sized enterprises in South Korea incurred a deficit of US$330 million, primarily due to expanded imports of computer programs. This marks the first instance of a deficit recorded on an annual basis.
By industry, the manufacturing sector accumulated a surplus of US$2.77 billion. Within this sector, electrical and electronic products, totaling US$2.11 billion, and automobiles and trailers, reaching US$1.65 billion, recorded the largest surpluses ever. Conversely, the information and communication technology industry recorded a deficit of US$1.45 billion, marking the largest annual deficit. The service sector experienced a deficit of US$2.71 billion.
When looking at trading partners by country, last year saw record deficits in the United Kingdom amounting to US$3.23 billion and in the United States totaling US$2.09 billion. In contrast, China recorded a surplus of US$2.52 billion, while Vietnam recorded a surplus of US$1.36 billion in intellectual property rights.