According to the Korea Small Business Institute, small and medium enterprises running their own research institutes suffered from a technology outflow worth $5.6 billion between 2011 and 2013. The amount was equivalent to 58% of their R&D expenditures for the same period.
The sales decrement caused by the tech leak was $2.27 million on average, or around 20% of annual sales.
However, despite knowledge of the problem, most companies have not make a large investment to prevent it. SMEs spent as little as $31,485 a year on average to prevent IP leakage, only around 66% of the amount invested by big businesses on average.
As Korean technology SMEs begins to open up to opportunities to export their products and services overseas this is likely to become even more of a problem. In addition competition from China is heating up at a rapid pace and Chinese firms, which often have vastly superior manufacturing capabilities, will likely be looking for opportunities to leverage opportunities in ‘stealing’ IP from their neighbor.
One organization that is trying to combat this is FuturePlay. While their scope doesn’t currently extend to SMEs, they are focused on helping Korean investors and high-tech entrepreneurs in their investment portfolio and incubator to protect their IP.
Steven Baek, a Director at FuturePlay explained that currently local entrepreneurs are not knowledgeable enough about IP protection. “Local Founders often come to use with proprietary technologies that have not been protected,” he explained. “While the focus for most startups is creating commercially viable products, there are often cases where protected IP can be sold independent of other technologies that have been developed by the startups. And in the situation where a company is acquired, fully protected IP can have a real impact on valuations, sometimes adding an extra zero to the deal. Missing out on these opportunities away just doesn’t make commercial sense,” he concluded.
Edited from original on Business Korea