South Korea’s Intellectual Property Trade Deficit Drops Significantly

The Bank of Korea announced on March 21 that South Korea’s intellectual property trade deficit hit an all-time low of US$720 million last year. Resulting from US$13.52 billion in exports and US$14.24 billion in imports, it is the lowest deficit since records began in 2010.

The central bank explained that South Korean game companies increased their exports of computer programs and franchise rights. Specifically, the first surplus, US$230 million, was posted in trademarks and franchise rights and South Korea’s surplus totaled US$1.25 billion in the case of the latter, led by an increase in exports from the game companies. The annual deficit fell from US$1.6 billion to US$1.02 billion when it comes to the former.
 

As for R&D and software copyrights, the annual trade surplus reached a record high of US$1.75 billion. The previous high is US$1.11 billion in 2016. The annual deficit fell from US$410 million to US$350 million in copyrights related to culture and arts. On the contrary, the deficit related to patent and utility model rights rose from US$1.2 billion to US$1.65 billion. This has to do with an increase in the import of such rights by large local companies manufacturing electrical and electronic products.
 

Large South Korean companies’ intellectual property trade surplus hit an all-time high of US$1.53 billion last year. The previous high, US$330 million, was in 2017. The Bank of Korea explained that some online game companies were reclassified into the group of large companies in September 2017, leading to a significant increase in surplus in terms of large companies’ publishing, video, broadcasting, communications and information service business.

When it comes to smaller firms, the annual surplus rose from US$1.32 billion to US$1.55 billion. Meanwhile, foreign-invested smaller firms’ deficit reached an all-time high of US$3.41 billion with foreign IT companies in South Korea paying more to their main offices with regard to trademarks and computer program copyrights.
 

In the electrical and electronic product manufacturing sector, the annual deficit reached a record low of US$740 million. Likewise, it hit an all-time low of US$300 million in retail and wholesale. In publishing, video, broadcasting, communications and information service, the annual surplus reached a new high of US$1.18 billion.
 

Last year, South Korea posted the largest intellectual property trade deficit, US$4.67 billion, with the United States. On the other hand, its surpluses with China and Vietnam increased during the same period. South Korean companies increased their franchise and computer program export to China, leading to US$3.02 billion in surplus. The surplus is US$2.46 billion with Vietnam, led by an increase in the export of patent and utility model rights related to South Korean companies’ smartphone production in Vietnam.