S. Korean conglomerates boost R&D spending, cut facility

Samsung Group scored the highest investment volume in R&D and facility-related expenses. <Yonhap Photo>

By Joel Lee

South Korea’s top conglomerates boosted spending on research and development (R&D) as a future growth strategy, while trimming down on capital investments in first half characterized by low consumer spending and exports.

167 listed non-financial firms belonging to the country’s 30 largest business groups poured 16.2 trillion won (US$15.9 billion) into R&D in the January-June period, according to a local corporate research firm CEO Score’s report on Wednesday.

The amount is a 7.3 percent increase, or 1.1 trillion won, from the previous year. The firms cut capital spending by 100 billion won to 38 trillion won in the same period, a 0.3 percent reduction.

The total investments by these companies in first half — covering facility-related, R&D and intangible asset values — stood at 56.3 trillion won, representing a 920 billion, or 1.7 percent, increase.

Samsung Group scored the highest investment volume out of the 30 company groups, spending a total of 20 trillion won (11.25 trillion on facility; 8.5 on R&D).

LG Group came second place, albeit a 4.3 percent drop from last year at 9 trillion won (5.4 trillion on facility; 3.3 on R&D).

SK Group ranked third place, with 7.6 trillion won of investment, the highest growth rate at 51 percent (6 trillion on facility; 1 on R&D).

Hyundai Motor Group came fourth at 4.6 trillion won (2.6 trillion on facility; 1.7 on R&D), a 17.3 percent decrease from the previous year, as major facility-related constructions were completed last year.

The total investment volume of these four groups was 42 trillion won, making up 73 percent of the amount invested by the 30 groups. Total investments made by the rest of the 26 groups stood at 15.2 trillion won, a 9.3 percent drop from the same period last year.

POSCO (2.6 trillion), KT (1.9), Hanjin Group (1.4), Lotte Group (1.3), CJ Group (1.0) and Hyundai Heavy Industries Group (0.93) followed.

Daewoo Engineering and Construction saw both capital (87 percent drop at 23 billion won) and R&D (39 percent drop at 23 billion) spending drop significantly over the one year period, the largest drop out of the 30 groups.