Technology Leakage Losses Near 60.4% of R&D Expenses... China Is the Top Priority for Vigilance

Very Vulnerable Competitiveness in Protecting Advanced Technology

[Asia Economy Reporter Park Sun-mi] Despite South Korea's world-class research and development (R&D) capabilities and investment levels, its competitiveness in protecting advanced technologies is very weak, with losses from technology leakage amounting to nearly 60.4% of the total R&D expenditure. Among countries to be most wary of in the field of technology leakage and protection, ‘China’ was identified as the top concern.

On the 27th, the Federation of Korean Industries surveyed 26 industrial security experts regarding South Korea's level of advanced technology protection. More than half of the respondents (57.7%) assessed South Korea's R&D capabilities as similar (38.5%) or higher (19.2%) compared to advanced countries. However, 84.6% of the industrial security experts responded that the level of advanced technology protection and prevention of technology leakage by Korean companies and institutions is lower than that of advanced countries such as the United States. This indicates that while R&D capabilities for advanced technologies are at an advanced country level, protection of these technologies is insufficient.

The biggest reason cited for the low level of technology protection and leakage prevention was ‘lack of national awareness regarding advanced technology leakage (18.2%)’. Additionally, ▲insufficient punishment and compensation levels for technology leakage ▲companies’ and institutions’ practices of avoiding disclosure and information sharing and passive responses to technology leakage ▲lack of incentives for companies, institutions, and personnel handling advanced technologies (each 15.9%) were also identified as major factors.

Regarding the annual damage scale to South Korea caused by industrial technology leakage, including overseas leakage, 33.4% of experts estimated it to be ‘40 trillion to 60 trillion won’, followed by 18.5% who expected 80 trillion to 100 trillion won. The damage amount derived from the average of response figures or median values of response ranges was 56.2 trillion won. This corresponds to about 2.7% of South Korea’s nominal GDP (approximately 2,071 trillion won as of 2021) and about 60.4% of South Korea’s total R&D expenditure in 2020 (approximately 93.1 trillion won).

Meanwhile, 9 out of 10 experts (92.3%) pointed to ‘China’ as the country to be most wary of in the field of technology leakage and protection, with some (7.7%) mentioning the United States.

For strengthening South Korea’s advanced technology protection capabilities, the most urgent policy identified was ‘strengthening punishment related to technology leakage acts (19.6%)’.

Also, ‘expanding the role of the economic security and technology protection policy control tower (17.7%)’ was cited as a key policy task. Following this were ▲public awareness improvement related to technology protection and dissemination of leakage damage cases ▲strengthening the development of industrial security professionals and related companies ▲introduction of management systems for personnel handling advanced technologies (each 13.7%) ▲strengthening incentives for companies holding national core technologies and key personnel (11.8%) ▲expansion of technology security education and consulting (5.9%) ▲enhancement of expertise in technology value evaluation (3.9%).

Yoo Hwan-ik, head of the Industry Division at the Federation of Korean Industries, said, “South Korea, with high competitiveness in advanced technologies including semiconductors, faces significant risks of core technology and personnel leakage. We must raise social awareness and complement institutional measures to ensure that technologies and intangible assets, which companies have developed with substantial investment of funds and time, are safely protected.”