Samsung sole Korean entry on innovation list as Chinese firms flourish

Samsung Electronics kept its place among the 50 most innovative companies of 2023 listed by the Boston Consulting Group (BCG) in May, but it was the only Korean corporation to make the list.

Chinese firms have further emerged on Boston Consulting Group's ″Most Innovative Companies 2023″ report. [SHUTTERSTOCK]

Samsung Electronics kept its place among the 50 most innovative companies of 2023 listed by the Boston Consulting Group (BCG) in May, but it was the only Korean corporation to make the list.

A joint analysis by the JoongAng Ilbo and Korea Chamber of Commerce and Industry (KCCI) on the report indicated that the weight of innovation is shifting to Chinese companies from U.S. firms.

BCG selects the top 50 innovative companies each year based on the number of votes received from global innovation executives, industry peer review and the total shareholder return over the most recent three-year period.

Samsung Electronics ranked as the seventh most innovative company, the same place it was in 2018. The electronics manufacturer was the only Korean company listed as LG Electronics and Hyundai Motor failed to maintain their position from last year.

Samsung has been on the lineup since 2005.

Samsung Electronics showcases its new foldables Galaxy Z Flip 5 and Fold 5 at the Galaxy Unpacked event held at Coex in southern Seoul on July 26. [YONHAP]

BCG said Samsung is “improving existing technologies with innovations, such as foldable phones, and increasing accessibility to products through mass production, lower costs and technological advancements.”

The consulting firm added that Korea’s market heavyweight spends more than $17 billion, or 9 percent of sales, on research and development, making it the largest non-U.S. spender in that respect.

BCG added that Samsung has developed new products and sought out new markets, “from displays and electronics components into robotics, smart home products, connected cars, medical equipment, virtual assistants and 5G connectivity."

The United States was the largest cradle for innovative companies, with 25 U.S. firms in the rankings. China tailed behind with eight, Germany with five and Japan with three.

Compared to five years ago, China added five more companies to the list while the United States and Germany lost three and France lost two. In 2013, China had only two on the register — Lenovo and Tencent.

The number of companies dubbed innovative by the Boston Consulting Group by country for 2013, 2018 and 2023. [KCCI, BCG]

Some of the notable Chinese firms in this year’s report were BYD Company and Xiaomi. BYD, ranked ninth, sold 1.29 million EVs in the first half of this year to acquire the largest portion of the global EV pie at 20.9 percent. It outpaced Tesla by 6.5 percentage points. Xiomi evolved its low-cost electronics beyond the smartphone market and into home appliances to rank 29th.

“Synergy among a robust domestic market, capital strength and the government’s full-width support brought about [Chinese firms’ progress],” said Kim Hyun-soo, head of the economic policy team at KCCI.

The so-called “dynamics index”, which indicates the number of companies entering and exiting the top 50 list, was highest in the United States, China and Germany. The United State’s ‘dynamics’ was at 27 with 12 new entrants and 15 dropping out compared to 2018, including Uber Technologies, Airbnb and Netflix.

China and Germany each had seven changes, but their dynamics moved in opposite directions as China had six newcomers such as BYD Company, Xiaomi, Sinopec and ByteDance, while Germany saw two new names and lost five.

ByteDance, operator of TikTok, is ranked 36th in Boston Consulting Group's top 50 most innovative company list. [AP]

Korea had no changes at each end of the 2018-2023 period, with Samsung Electronics being the sole Korean company. India, the Netherlands and Saudi Arabia beat Korea with one change apiece.

“Korea’s positive regulation [prohibiting all business activities except ones permitted under the law], regulation on conglomerates and a shortage of high-quality intellect obstruct innovation,” KCCI’s economic team leader said.

“Innovation has become integral in picking up a competitive edge as the business paradigm underwent a sea change following digital transition, the AI boom and low-carbon management,” Kim added.

The IT, bio, energy, car components and communication service sectors benefited from the shift. Moderna, Nvidia and Shell did not make the roster in 2018 but came in at sixth, 14th and 24th, respectively this time.

“It is imperative to allow companies to dynamically move in and out of the innovative companies list,” said Hong Dae-soon, a professor at Kwangwoon University Graduate School of Business Administration.

“The government must encourage innovation by fueling energy into emerging markets and improving existing systems and policies in tandem.”

BY CHOI EUN-KYUNG, SOHN DONG-JOO [sohn.dongjoo@joongang.co.kr]