According to Nikkei Asian Review, South Korea will create a database of engineers to monitor their travel status in order to deter foreign companies from poaching talent and prevent key technologies from falling into the hands of foreign competitors.
The measure is a key part of South Korea’s five-year plan to strengthen intellectual property protection, which consists of several government agencies, including the Ministry of Industry and Justice, the South Korean Intellectual Property Office and the National Intelligence Service, the report said. The five-year plan to strengthen IP protection was established to prevent the trend of brain and key technology drain that has become a growing problem for South Korean high-tech companies such as Samsung Electronics that rely on their technological advantages. According to statistics, there have been 397 technology leaks in South Korea in the past five years.
The five-year plan calls for a list of people with advanced knowledge in 12 of South Korea’s most competitive “national core technologies” such as batteries, organic light-emitting diode displays, ships and steel, according to the report. This includes South Korean companies and research institutions that will be required to log in any employees who meet these criteria. After this information is created, the South Korean government will track the actions of those on the list. The South Korean Ministry of Industry says the move is aimed at stopping engineers from jumping ship to foreign competitors.
In addition, the newly established database will not be limited to South Koreans, including foreign engineers employed by South Korean companies or local subsidiaries of foreign companies will also be included, which means that the South Korean government may monitor Japanese citizens who work under Japanese companies and live in South Korea. However, the Korean Ministry of Industry said that the details of the list database have not yet been determined. And, in the future, the South Korean government may face objections from foreign companies to this.
The report further pointed out that South Korean prosecutors investigated 112 people in 2020 who were suspected of violating South Korea’s trade secrets law and involved in leaking confidential technology overseas, most of which were related to Chinese companies, and the South Korean National Intelligence Service found an increasing trend of such incidents during its surveillance operations. In addition to monitoring the movements of employees of high-tech companies, the South Korean government expects to impose harsher penalties for violations of the Trade Secrets Act, including three years or more in prison for leaking information to foreign companies, which is much more severe than the current situation where violators are usually only fined.
In addition, South Korea is also paying close attention to potential technology leaks resulting from mergers and acquisitions. Currently, foreign companies are required to undergo a review if they own more than 50% of a South Korean company with cutting-edge technology. The South Korean government is also planning to lower this threshold to 30%. In addition, the South Korean government will also begin to subsidize a special bonus of 30% to encourage personnel with cutting-edge technologies to stay in South Korea.
In fact, South Korea’s five-year plan to strengthen intellectual property protection comes in part from the painful lessons learned from the LCD industry. That is, about 10 years ago LCDs were South Korea’s largest export after semiconductors, with Samsung and LG Display ranking among the top two global producers. However, Chinese companies such as BOE and TCL Huaxing began to expand production in the mid-2010s with the support of national and regional subsidies. Since then, the ensuing increase in global supply has put heavy pressure on South Korean manufacturers. Samsung has announced plans to exit the LCD business, and LG Display will stop domestic production.
After Samsung and LG Display announced that they would withdraw from the LCD industry, many South Korean talents have moved to China to work for Chinese manufacturers. Among them, BOE has more than 50 South Korean technicians working on new production technology development. In addition, according to a patent consultant, there are more than 100 South Korean chip engineers working at SMIC, the largest foundry in China.