So says an article titled "Rising in the East" in a recent edition of The Economist. The article contains more eye-opening facts. "Korean firms spend more on R&D as a percentage of sales (6.5%) than European and Japanese firms (around 5%), and are catching up with American ones (about 8%)."

Supported by such R&D efforts, Korea's growth in the number of patents it has had granted is remarkable, increasing by 15 times in 10 years, from 25,000 in 1997, when Korea’s patent office first opened, to 370,000 in 2007. The country ranks fourth in the world in the number of patent applications.

The number of applications from Korea to the Patent Cooperation Treaty grew from 10 in 1984 to 5,835 in 2006, ranking the country fifth in the world. Its number of patent registrations with the Triad Patent Families, which include the U.S. Patent and Trademark Office, the Japan Patent Office and the European Patent Office, places Korea fourth in the world, behind the U.S., Japan, and Germany. Cutting-edge global technologies, such as WiBro and DMB, represent the achievements of such endeavors.

Considering recent developments, it might be fair to say that Korea is opening a new chapter with its R&D efforts. Following achievements in semiconductors and shipbuilding, it appears that the country's tenacity and perseverance are about to lead to another impressive success in the global market.

Does this, however, hold true upon closer inspection? First of all, let's look at Korea's patent account balance, i.e., the balance between the proceeds from patents and the payment of patent fees. According to a 2006 analysis by the Japanese International Trade Investment Research Center, Korea recorded a deficit of US$2.6 billion, making it the fifth-largest patent deficit nation in the world, while the U.S. and Japan recorded surpluses of US$35.9 billion and US$4.6 billion, respectively. From 2005 to June 2008, the total adverse balance of deficits, including those from patents, reached US$10.3 billion (approximately W13 trillion).

One expert said, "Even when patents are granted, 53 percent are not commercially viable, becoming practically useless. That is the major reason." Viable patents are becoming increasingly scarce.

An R&D officer at a large Korean firm said that because his company did not own many of the fundamental technologies it harnesses, when it develops an application based on one of these technologies, it's required to pay patent fees to other countries. This is a cyclical pattern that repeats and intensifies.

The investments being made in R&D are delivering disappointing results. According to the Korean patent office, the total budget for R&D among Korean companies in 2005 amounted to W7.8 trillion and the total applications made in the nation numbered 5,487, i.e., the number of patent applications per W1.0 billion of R&D investment equals 0.7. While Korea's total R&D spending from GDP ranked seventh in the world in 2006, its achievements ranked just 22nd.

When compared with Japan's, Korea's achievements are even less impressive. For the period from 1981 to 2004, Korea's investments in R&D totaled US$260 billion, which amounts to just a seventh of Japan's (US$1.73 trillion). Thus, praise from the foreign media seems quite premature. Rather than congratulating ourselves on the success we've had in terms of quantitative growth, it is time we focus more on the strategic efforts needed to become a true powerhouse in R&D and patents.

By Song Ui-dal from the Chosun Ilbo's News Desk