South Korea and Taiwan have emerged as two of the world’s technology development powerhouses.

South Korea and Taiwan have emerged as two of the world’s technology development powerhouses according to the government’s latest analysis of R&D investment by UK companies and their competitors around the world.

The aggressive research-led strategy of the two south-east Asian nations was one of the key themes of the DTI’s 15th annual R&D Scoreboard, which ranks the world’s 1,000 biggest companies by R&D investment, as well as the top 750 in the UK.

Encouragingly, the study revealed that since 2001 many more UK companies have become ‘R&D vigorous’ — classed as those spending more than four per cent of sales on research-related activities.

But Dr Mike Tubbs of the DTI’s Innovation Group said the significant growth in R&D in South Korea and Taiwan, which between them now contribute 33 companies to the global 1,000, was the surprise package of this year’s analysis.

South Korea is now the eighth highest nation on the scoreboard, with overall R&D as a country up by 40 per cent. This was helped by the likes of Hyundai, which more than doubled its R&D investment to £976m, and Samsung (£2.5bn, up 37 per cent).

‘The comment usually made when this happens,’ said Tubbs, ‘is that their R&D spend started at a low level. But this increase means they are putting 3.7 per cent of sales into R&D, the same as Peugeot. If they increase again next year, they will be ahead.’

Another surprise to emerge from the ranking this year was the relatively poor showings of India and China which, despite their fast-growing economies, had few of the biggest R&D investors.

Also notable on the scoreboard were the differing approaches companies took to securing patents derived from their research. Honda and Yamaha, for example, secured well above the average number of patents relative to the amount of R&D carried out.

‘Honda is one of the world leaders in engine development,’ said Tubbs. ‘Presumably it is holding on to some of these ideas. Interestingly, some other car makers such as Peugeot, Renault and Fiat emerge with relatively few patents.’

‘You can see Japanese companies are doing more in terms of development than European ones,’ said Tubbs, who added that this seems to be because the Europeans are content to leave more R&D to their suppliers.

Two stars: Foreign owned. One star: Not in 2000 scoreboard. Cross symbol: Now part of GE.

On a global scale, the largest three R&D sectors are automotive, electronic hardware and pharmaceuticals. In the UK, the emphasis is on pharmaceuticals, aerospace and automotive.

The report shows that since 2001 many more UK companies (up 32 per cent) are spending more than four per cent of sales on R&D. And it’s not only the big companies that are investing in development.

Second tier, mid-range firms are cottoning on to the benefits to be derived from directing some capital into R&D to generate sales that will materialise in two to three years’ time.

Aerospace and defence was the UK’s second largest R&D sector behind pharmaceuticals, showing high R&D intensity and steady growth.

BAE Systems, Airbus and Rolls-Royce accounted for 83 per cent of UK R&D aerospace investment. BAE committed a formidable 12.2 per cent of sales into its R&D division, while Rolls- Royce ploughed back 4.7 per cent.

The automotive sector — the UK’s third biggest in R&D — accounted for 7.7 per cent of investment, though growth was held back by a 12 per cent reduction in Ford’s UK research spending.

Revealingly, 15 of the 22 UK automotive companies in the R&D 750 list are foreign owned, including four of the top five.

While the scoreboard vindicates investment in R&D and its link with company performance, those who compiled it offered a note of caution — research and development spend will only yield results if undertaken as part of a sound overall business strategy.