[News] Korean IPR trade surplus of $1.8 billion 'largest ever'

Author | Editor

Date | 2024.03.24

South Korea's Intellectual Property Rights(IPR) trade balance turned positive for the first time in a year in 2023. It also broke the record for the largest annual surplus in history. This was due to the success of K-pop singers such as BTS, BLACKPINK and Nnewjeans, as well as strong exports of K-contents such as K-dramas and K-webtoons.

According to the "IPR Trade Balance for 2023 (Provisional)" released by the Bank of Korea, Korea's IPR trade balance recorded a surplus of $180 million last year.

This was a year after the country recorded a deficit of $1.11 billion in 2022. It is the second largest surplus on an annual basis and the largest surplus since 2021 ($160 million), when the country recorded its first surplus thanks to the global success of BTS and the Netflix original series "The Squid Game.

The IPR trade balance is a statistic that covers all types of transactions related to the sale and use of intellectual property rights, such as industrial property rights (patents and utility models, franchises, etc.) and copyrights (music and visual copyrights). Within the current account, international transactions related to IPRs are calculated separately. IPRs are classified as exports when they are received against payment and as imports when they are paid for.

Korea's IPR trade balance recorded its first surplus ($160 million) in 2021, then turned into a deficit of $1.1 billion in 2022, but returned to a surplus in 2023.

The IPR trade balance is calculated by separating international transactions related to IPRs from current account items, with exports counted as exports and imports counted as payments for IPRs.

Breaking down IPRs by type, the balance of payments for industrial IPRs showed a deficit of $1.86 billion, led by patents and utility models (-$700 million) and trademarks and franchises (-$1.17 billion). The deficit narrowed from the previous year (-$2.62 billion).

"Exports of patents and utility models to local affiliates of large Korean companies such as automakers and secondary battery manufacturers increased significantly due to the expansion of overseas factories and increased demand for domestic products," said Moon Hye-jung, head of the Balance of Payments team.

The copyright balance recorded a surplus of $2.21 billion, up from a surplus of $1.74 billion in the previous year.

The surplus in cultural and artistic copyrights, including music and visual works ($950 million), was the largest on record at $1.1 billion.

R&D and software (SW) copyrights had a surplus of $1.1 billion. Within R&D and software, computer programs, including games, had a deficit of $2.12 billion, narrowing from the previous year's deficit (-$2.21 billion).

"While demand for Korean cultural content such as music, dramas and webtoons remained robust, cultural and artistic copyrights achieved the largest surplus ever as overseas performances expanded after the coronavirus pandemic," Moon said.

"The surplus in software copyrights widened despite the sluggishness of the game industry due to increased exports of domestic computer programs for IT support of overseas subsidiaries of Korean conglomerates," he added.

Among trading partners, deficits were recorded in the United Kingdom (-$3.23 billion) and the United States (-$2.09 billion). In the case of the UK, this is the largest deficit on record. On the other hand, Korea had surpluses with China ($2.52 billion) and Vietnam ($1.36 billion) last year. (END)