China Sprints Before Korea in R&D

China is racing ahead of Korea in exploration and production at an alarming pace. The number of Korean businesses in the world's top 2,500 companies in conditions of R&D fell from 80 in 2014 to 59 in 2019, while that of Chinese businesses soared from 301 to 536.

The Federation of Korean Industries based the figures on analysis of a written report by the EU Executive Committee. They recommend that Korea's proportion in global R&D expenditure fell from 3.9 percent to 3.6 percent over the period while China's jumped from 5.9 percent to 13.1 percent.

China's features poured massive levels of government money into its rise as being a technological power.

As recently as 2018, Samsung Electronics ranked at the top of Asian companies regarding R&D investments and second on the globe. However, in 2019, Huawei overtook it with W22 trillion over Samsung's W21 trillion (US$1=W1,125).

China's Alibaba and Tencent were also among the world's top 50 at 26th and 46th, while Korea's LG Electronics ranked only 55th. 

The FKI also analyzed OECD statistics and found that three out of five semiconductor manufacturers with the highest proportion of government support funding in 2014-2018 were Chinese.

An FKI staffer said, "China offers large funding assist with individual businesses and that money is committed to R&D. But aside from a few state tasks, there is practically no government assistance in Korea."

Another problem for Korea is going to be that R&D spending is going to be massively concentrated in the semiconductor sector led by Samsung, which makes up about 47.2 percent of total corporate R&D expenditures.

Huawei, the R&D leader among Chinese businesses, makes up only 16.4 percent of the country's total spending, while in the U.S., Google parent firm Alphabet makes up about 7.5 percent, and in Japan Toyota for 7.9 percent.

Korea focuses 59 percent of spending on the It all sector, which include semiconductors, however in China, the semiconductor sector makes up about 30 percent and found in Japan for 19 percent.

In contrast, the proportion of R&D spending in new-growth industries like software and healthcare was 23 percent in China and 17 percent in Japan but just four percent in Korea. That may be the reason that Korea's game giant NCsoft simply ranked 568th on the globe and NXC, the parent enterprise of rival game developer Nexen, 977th. Hanmi Pharm was the only Korean pharmaceutical organization among the world's leading 1,000 at 816th. 

Kim Bong-man at the FKI said, "R&D spending in healthcare, computer software and other new-development industries in Korea remains to be weak. The government shouldn't impose extra regulations on these industries but instead offer tax breaks and other support for businesses investing in R&D to improve global competitiveness."