Samsung and LG see talent pulled to China

South Korean tech giants Samsung and LG are losing some of their talented designers and engineers to Chinese companies, sources say.

LG Electronics staff, mostly product designers in the mobile division, are leaving the company voluntarily due to offers from Chinese tech giants such as Xiaomi, LG insiders say.

Chinese firms are looking to South Korean companies to follow in the tech sphere, one of the sources said, so it was natural for them to headhunt there. The Chinese companies offer substantial pay increases, as well as shorter working hours.

LG recently downsized its mobile communications company due to declining profits, an action that is ongoing since president Juno Cho took over the business in January last year. Cho chose the designs for the flagship leather-backed G4 and metal-backed V10, with many of the "unique" prototype designs dumped, which irked designers.

Samsung has been more aggressive in its group-wide restructuring drive, which saw much of its workforce moved from company to company. Samsung Electronics has also shed many of its non-profitable business process, such as notebooks and fibre cables, forcing many employees to leave for other firms, with China being a favourite destination.

Many of them are leaving for Chinese companies like Huawei, which competes with Samsung in smartphones and network equipment. The two also have a similar vertical office culture that makes it easy for them to adapt, sources say.

China is also pulling many semiconductor experts from Samsung and SK Hynix. South Korea is the largest shipper of memory chips and it is a business designated a "backbone industry" by the government, increasing worries.

A downturn in the South Korean economy is also making it a ripe environment for headhunting by Chinese firms. South Korea is expecting a GDP growth rate of 2.8 percent this year while Japan's central bank recently moved to a negative interest rate in its attempt to boost the economy.

South Korea has notoriously long working hours; according to the OECD, Korea ranked second in working hours behind Mexico in 2014, with 2,124 hours per person a year on average.

Xiaomi shipped over 70 million smartphones last year, while Huawei became the first Chinese handset maker to ship more than 100 million, threatening the dominant position held by Apple and Samsung.

South Korea and neighbouring Japan are highly sensitive of technology leaks to China, as indicated by the Japanese government's opposition to Foxconn's attempts to buy Sharp.

Samsung and LG were unavailable for comment.


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