S Korean firms spent more on R&D this year despite Covid
FACED with growing market uncertainties stemming from the pandemic, large companies in South Korea expanded their research and development (R&D) investment to secure future growth engines. Samsung Electronics and Naver led the way, data showed on December 9.
According to an analysis conducted by Seoul-based corporate tracker CEO Score of 217 of the country’s top 500 companies by revenue, the companies’ total aggregate R&D spending came to 40 trillion won ($36 billion) from January to September.
It was up 2.03 per cent from the same period last year. Their revenues totalled 1,178 trillion won, down 4.85 per cent year-on-year.
By company, Samsung Electronics spent the most in R&D. The tech giant spent 15.8 trillion won, which is 9.07 per cent of its cumulative sales of 175 trillion won. It was followed by LG Electronics, SK Hynix, Hyundai Motor, LG Display and Kia Motors, which all invested more than one trillion won.
The corporate tracker said the ratio of R&D to sales of the surveyed companies also rose 0.23 percentage points to reach 3.4 per cent this year.
The number of companies that spent more than one per cent on R&D in proportion to sales increased from 92 last year to 96 this year.
Naver topped the list, by spending more than 25 per cent. The search giant invested 967 billion won in research and development out of the sales of 3.7 trillion won.
Companies in pharmaceutical and service industries also ranked high. Hanmi Pharmaceutical and game developer Netmarble spent more than 20 per cent of their sales on R&D while drugmaker Celltrion and game company NCSoft spent more than 15 per cent.
By industry, information technology, electronics and pharmaceutical companies have greatly expanded their R&D investment. The R&D investment in the IT and electronics industries stood at a combined 24 trillion won, up by 463 billion won on-year. The petrochemical industry increased by 264 billion won to reach 1.9 trillion won.
Automobile, auto parts, household goods a nd petrochemica l compan ie s have i ncrea s e d t hei r R & D investment despite falling sales. The investment by automobile and auto pa r ts was a combined 5.3 t r i l l ion won, up 100 billion won.
Not all companies were able to afford big spending, however.
The R&D costs of the shipbuilding, machinery and equipment industries decreased by a combined 163 billion won from a year ago, the largest decline among other industries. The costs for services, public enterprises, steel, construction and building materials also decreased by more than 10 billion won, respectively.
Nineteen companies, including Posco International, Kolon Global, Hyundai Engineering, Posco Energy, GS Retail and SK Incheon Petrochem, spent less than 0.1 per cent on R&D in proportion to sales.