Russia's Ties with South Korea Deepen
Despite the failure of South Korea's first rocket, developed with Russia, there's a growing industrial partnership between the old Cold War foes
It was a day of disappointment in South Korea. On Aug. 25, the country made its long-awaited debut, launching its first rocket from the southern tip of the Korean peninsula. Initially the two-stage rocket, called the Naro, seemed to take off flawlessly, but soon the bad news came: The Naro had failed to put the satellite it was carrying into its intended orbit. Now the Korean government is pledging an investigation along with Russia's Khrunichev State Space Science & Production Center, which had developed the rocket's lower stage and the vehicle's design.
The setback is a blow to the growing ties between the Koreans and the Russians, who have played a key role in the development of South Korea's overall space program. Russian rockets have in the past carried Korean satellites, including a small high-resolution surveillance satellite known as KOMPSAT-2 in 2006. Last year Seoul sent its first astronaut into space aboard a Russian Soyuz rocket after completing training in Russia. The astronaut, Yi So Yeon, spent 11 days on the International Space Station, carrying out experiments for the government and industry.
The space cooperation is emblematic of a growing industrial partnership between Korea and Russia. Giant Korean conglomerates such as Samsung and LG hire between 100 and 200 engineers and scientists at their research centers in Russia, which are responsible for registering scores of international patents annually. "Probably more important for us is technology outsourcing," says spokeswoman Judy Pae at LG, which employs some 150 engineers and scientists in its lab at St. Petersburg and a further 50 people in its Moscow office who are devoting themselves to arranging technology outsourcing in Russia.
TWO-WAY STREET
Tieups thrive as each country complements the other's weakness. Korea, home to leading makers of TVs, mobile phones, flat-panel screens, cars, and ships, is helping its Russian partners to commercialize technologies and apply them in mass production while tapping Russia's excellent research on basic sciences and original technologies. Both Samsung and LG, for example, develop in Russia software platforms for their mobile phones, chips used in digital products, and optical solutions.
Reluctance by Japanese and Western companies to share technologies with Korean rivals is also prompting the Koreans to forge partnerships with the Russians. "The Japanese, Germans, and Americans either deny access to their state-of-the-art technologies or charge exorbitant license fees to Korean rivals," says senior researcher Cho Joong Hoon at the state-funded Korea Institute for Advancement of Technology. "Russians are also more accommodative in negotiating terms for sharing intellectual properties after joint R&D."
The trend began early this decade when Korea's magnates tried to start leapfrogging their Japanese mentors with innovation. At the time there was no shortage of access to Russia'sunderemployed educated class because of economic difficulties in their nation. Many Russian engineers worked in Korea for years at labs run by companies and the government to help iron out problems in the course of rolling out leading-edge products.
Examples of Russian achievements abound in the lineup of popular Korean products. Russian brains helped Samsung develop the image-processing chips in its digital TVs and refine its frequency-filtering technology that significantly reduced noise on its now-ubiquitous handsets.
Russian scientists from Moscow State University also helped develop LG's efficient cooling pipes that bolster its air conditioners, while the technology that was once used to cool Soviet tanks was applied for a multicompartment appliance that chills, ferments, and stores kimchi, the spicy, pickled cabbage served on virtually every Korean dining table.
WIDER COOPERATION
Now with the Russian economy back on its feet, many Russians have returned home. But big Korean companies have already firmly established their research centers in Russia. So the Seoul government's current focus is on maintaining technological cooperation with Russia for Korea's small and midsize companies. "The government is running a pilot project this year to help smaller companies find Russian partners with original technologies," says Kim Gwang Seok, a deputy director at the Knowledge Economy Ministry, which is doling out up to $320,000 to each select startup seeking a technological breakthrough together with a respectable Russian engineering partner.
There are early signs the government project could prompt startups to seek innovation. "Partnership with the Russians allows us to tackle ambitious tasks that would be too complex and costly otherwise," says Chief Executive Ahn Saeng Youl of Wookwang Tech, a beneficiary of the government aid. Wookwang, an electronics components maker, plans to sell a power cable monitoring system that combines a chip-based sensor technology developed by Russia's St. Petersburg State Polytechnical University with wireless communications to quickly detect abnormal power distribution. "Government involvement also provides credibility when we seek ventures with Russian partners," adds Ahn.
The Seoul government plans to expand the aid project if the pilot project proves successful. "There are good business potentials for a win-win in this project," says ministry official Kim. "Both parties will benefit if the Koreans' production and application technologies could be married to advanced research results in Russia that have not been put into commercial use."
Moon is BusinessWeek's Seoul bureau chief.
