S.Korea, China's technology leak, anti-dumping disputes surge

South Korean companies are getting tough on anti-dumping and patent infringement cases as they feel threatened by the intensifying price competition and narrowing technology gap with their Chinese rivals.

Previously, trade disputes between the two countries had been centered on protecting trademark and design rights against counterfeit products involving small and medium-sized enterprises.

Now, Korea’s export heavyweights, including POSCO Holdings Inc., Hyundai Steel Co. and petrochemical firms, are taking the lead in bringing patent infringement and trade secret leakage charges against their Chinese peers with the Korean government.

In the first half of this year, Korean companies filed six anti-dumping complaints against foreign companies, asking the government to slap tariffs on foreign goods or take action to stop their low-price offensives, according to the Ministry of Trade, Industry and Energy on Thursday.

A majority of them have been lodged against Chinese firms in the steel, petrochemical, biotechnology, battery and new materials sectors, in which China has been rapidly narrowing the gap with, or overtaken, Korea in terms of technology or output.

“Domestic conglomerates that rely on exports have generally refrained from filing anti-dumping complaints, considering their relationships with the target countries,” said a Korean business group official.

“But the rise in anti-dumping and patent infringement cases indicates the significant sense of crisis these companies are now feeling.”

If the trend continues, the number of anti-dumping charges brought against China is expected to exceed the 11 cases filed in 2002, the year after China joined the World Trade Organization (WTO).

DISGUISED INVESTMENT

In addition to intellectual property infringement, a number of Chinese companies were found to have leaked key technology after investing in Korean companies.

In the first half of this year, China made 421 direct investments in Korea, totaling $2.99 ​​billion. That accounted for 25% of foreign direct investment in the country in that period.

It surpassed the all-time high $2.74 billion of Chinese direct investment in the country in 2018 on an annual basis and nearly double the $1.58 billion in 2023.

By industry, 76% of China's investments in Korea was funneled into the manufacturing sector, of which the electrical and electronics industries such as semiconductors, and chemicals such as rechargeable batteries made up 80%.

Industry watchers said many Chinese investments in the country were seen as aimed at technology leakage.

According to the National Police Agency, China accounted for 10 of the 12 cases of overseas technology leakage crimes that have occurred so far this year.

Write to Jung-hwan Hwang and Yeong-Hyo Jeong at jung@hankyung.com
 

Yeonhee Kim edited this article