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Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.
Whereas South Korea has a status for innovation, its financial improvement over the previous half-century has been pushed largely by its means to “soak up” and develop applied sciences — whether or not within the chip, battery, auto or shipbuilding sectors — that had been invented elsewhere.
This was achieved principally by formally sanctioned “technical co-operation” with US and Japanese corporations lengthy since changed as market leaders by their former companions. However it was generally supplemented by sharper practices. In a single well-known case relationship again to the late 2000s, South Korea’s Kolon Industries paid $360mn in penalties and compensation over a conspiracy to transform commerce secrets and techniques regarding the manufacturing of Kevlar physique armour fibre from US chemical compounds large DuPont.
Now South Korea finds itself doubtlessly being subjected to comparable practices from China — an issue illustrated by a authorized battle being waged within the US between Samsung Show and Chinese language state-owned rival BOE Know-how, previously Beijing Oriental Economics.
In 2018, a number of senior staff of Toptec, one among Samsung Show’s Korean subsidiaries, had been charged with leaking mental property to the Chinese language firm. 5 former and present Toptec staff, together with the chief government, and three intermediaries have since been handed jail sentences by the Korean courts. Final week, Toptec’s former head of gross sales obtained three years for violating the nation’s Unfair Competitors Safety Act and legal guidelines in regards to the theft of commerce secrets and techniques.
“This act not solely made [Samsung’s] efforts out of date, it may additionally massively harm the nation’s industrial competitiveness,” the choose declared.
In October, Samsung Show filed a grievance towards BOE with the US Worldwide Commerce Fee to cease the Chinese language firm from promoting shows within the US that Samsung alleges include its stolen expertise. On Friday, the ITC confirmed it was opening an investigation into BOE on the idea of Samsung’s grievance. BOE didn’t instantly reply to a request for touch upon the allegations.
The show business options a lot much less prominently than chips or batteries in debates on financial safety and provide chain resilience. However its significance goes past how sharp a picture you’ll be able to get pleasure from in your smartphone, laptop computer or TV. Within the coming age of autonomous automobiles and weapons and digital and augmented actuality, cutting-edge show applied sciences shall be important elements in next-generation navy methods.
That helps clarify why South Korea and China each take it so significantly. Show is the one expertise aside from semiconductors to characteristic on all 4 of the South Korean authorities’s lists of core applied sciences. Based on South Korean authorities figures, between 2016 and 2023 Chinese language entities efficiently stole extra expertise from the South Korean show sector than from another business aside from the chip sector.
Samsung and fellow South Korean show maker LG nonetheless get pleasure from a technological edge in top-end natural light-emitting diode shows, however this will likely not final for lengthy. Final week BOE, which has already squeezed its South Korean rivals out of the decrease finish LCD market, introduced it was constructing a $9bn superior OLED manufacturing facility within the Chinese language metropolis of Chengdu.
The Chinese language firm’s advance illustrates how South Korea’s technological superiority over its east Asian neighbour is slowly slipping away. However as Ben Forney, a researcher at Seoul Nationwide College notes, the story of BOE and South Korea goes again a lot additional than the Toptec scandal.
In 2003, the Chinese language firm acquired Hyundai Show Know-how, then a subsidiary of the Korean SK Group conglomerate. BOE despatched 132 Chinese language employees to South Korea to combine the 2 corporations’ methods — a course of the South Korean firm didn’t survive. “By 2008, HDT had gone bankrupt, whereas BOE has since emerged as one of many largest show corporations on this planet,” says Forney. “HDT was left for useless, and it was all completely authorized.”
In brief, BOE is now threatening Samsung’s place on the excessive finish of the worldwide show market as a result of Korea Inc did a lot to assist the Chinese language firm get off the bottom within the first place. Whereas Seoul is now making severe efforts to clamp down the “tech leakage” to China in a variety of sectors, the thriller is how a rustic so adept at “absorbing” applied sciences from abroad ought to have left it so late.