By 2004 Samsung Electronics was spending more on research and development than any other Asian company outside Japan. Its R&D investment rose to $4.6bn (£2.5bn, 8.3 per cent of sales) in 2004 from...

By 2004 Samsung Electronics was spending more on research and development than any other Asian company outside Japan. Its R&D investment rose to $4.6bn (£2.5bn, 8.3 per cent of sales) in 2004 from $1.6bn (5.8 per cent of sales) in 2000. The South Korean giant recruited 3000 scientists and engineers a year to its 25,000-strong R&D workforce. Although Samsung started carrying out R&D abroad from around 2000, Kim Chuljin, head of corporate technology strategy, said 93 per cent of the work was carried out in six R&D centres in Korea. The heart of Samsung’s corporate research effort remains in Suwon, 50km south of Seoul, where the company was founded in 1969 to make black-and-white televisions. A distinctive feature of Samsung’s approach was its Value Improvement Programme, based in Suwon. Individual business units submitted provisional details of their significant product and process innovations to the VIP Centre, where each one would undergo intensive scrutiny by a team of scientists, engineers and other specialists seconded to the project from across the company (or in some cases hired as sub-contractors). A team normally had between 15 and 80 members, who worked together on a project for a few months. The centre handled about 40 projects a year. ‘Team members were freed from their normal duties and worked full-time on the project’, said Jung Kyunghan, VIP senior manager. The work could be all-consuming, so the top floor of the centre was a dormitory. The team looked at every aspect of a proposed innovation, trying to cut production costs and improve performance. Cost savings are usually the easiest way to measure success, said Mr Jung. Some cost reductions achieved included 31 per cent for Samsung’s plasma-display televisions and 35 per cent for the SPH-A680 mobile phone. ‘Altogether the centre saved $2.5bn in 2004 and with further planned savings of $3.5bn for the following year’, he said.