The Peninsula

Small Enterprises Lead Tech Innovations

On June 20, 2022, the Korean Intellectual Property Office (KIPO) began recruiting Small and Medium Enterprises (SMEs) for a new program designed to bolster SMEs’ preparation against international patent disputes. This reflected Korea’s recognition of SMEs as a leader in the country’s technological advancement. According to the KIPO, the total number of patent applications in Korea increased by 8.3% during the pandemic with the increase in filings by SMEs (23.4%) almost three times the growth rate of that by large conglomerates (8.3%). In 2020 alone, patents filed by SMEs constituted nearly 85% of the country’s year-on-year increase in patent applications. This comes as patent applications from the country’s flagship conglomerates fell in recent financial crises and economic slowdowns.

However, the expansion of SME patenting activity was largely limited to manufacturing and digital transformation industries that disproportionately thrived during the COVID-19 pandemic. These include computer programming/information services and manufacturing in medical devices and pharmaceuticals, which have occupied 82.6% of the country’s entire patent application growth during the pandemic. Unlike large corporations that mainly file patents to achieve internal processes and productivity growth, the patenting activities of SMEs are predominantly driven by external changes.

Actively securing intellectual property (IP) rights and responding flexibly to external changes is still a positive indicator of sustained technological competitiveness. The expansion of financial services around IP may also promote SME growth beyond the pandemic. But worryingly, non-manufacturing SMEs have continued to face difficulties throughout the COVID-19 crisis. As the global economy normalizes, Korea will also have to face structural weaknesses in its economy, especially the fragility of its services industry.

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

Korea View was edited by Yong Kwon with the help of  Jae Chang, Kaitlyn King, Yu Na Choi, and Mai Anna Pressley. Picture from the flickr account of jeong gon kim