By Kim Tae-gyu
Staff Reporter


China continues to undercut Korea’s growth potential by acquiring hard-earned expertise in the nation’s flagship industries _ online games, cell phones and displays.

Shanda Interactive Entertainment, China’s leading online game provider, on Tuesday said it inked a $91.7 million contract to buy a controlling 29-percent stake in Korean game developer Actoz Soft.

The announcement surprised the nation since Shanda has grown thanks to ``The Legend of Mir II,’’ by far the most popular online game in China, co-developed by Korea’s Actoz and Wemade.

Established in 1999, the Shanghai-based Shanda has grown on the strength of the game, and launched a $152 million initial public offering on the Nasdaq in May.

Experts point out the transaction will enable Shanda to kill two birds with one stone.

``By snapping up Actoz, Shanda will be able to settle pending legal disputes with Actoz and Wemade easily as well as quelling doubts regarding its renewal of `Mir II’ license contracts,’’ a Seoul analyst said.

Last year, Actoz and Wemade filed a pair of lawsuits against Shanda for underpaying royalties and pirating Korean players’ ideas to develop its own game.

The acquisition of Actoz’s stakes will also ensure Shanda maintains its rights to operate ``Mir II,’’ of which copyrights are shared 50-50 by the two Korean firms, in the future.

In recognition of such benefits, Shanda chief executive Chen Tianqiao expressed an upbeat stance by saying: ``We are excited about the beneficial results that can be created by this deal through closer cooperation with Actoz.’’

However, critics said the synergy effects will occur only for Shanda at the expense of both Actoz and the overall Korean game industry.

``Shanda seems intent on just taking full advantage of Actoz to come out with self-developed games. Shanda will not spend money for Actoz but will only seek to take its business know-how,’’ said Hwang Seung-taek, an economist from Hyundai Securities.

Hwang even went so far as to say the shareholders, including ex-Actoz president Lee Jong-hyun, should not dispose of the stakes for the sake of Actoz and the nation’s game industry development.

Leakage of Other Technologies

This is not the first time Chinese firms have snatched Korea’s leading-edge technologies.

Hyundai Syscomm caught the nation off guard last month by disclosing the firm sold source technologies for code division multiple access (CDMA) to a Korean unit of UTStarcomm, a U.S.-based telecom equipment maker, for $14 million.

Although headquartered in the United States, UTStarcomm retains close relations with China as most of its revenues have come from services provided on the mainland.

Korea vowed to make all possible efforts to nullify the deal via court action in order to maintain its dominant global CDMA power status.

However, the prosecution dropped the suit on the grounds that it is not a technology leakage because the transaction was made between two Korean-based firms.

``UTStarcomm appeared to have acquired the CDMA technologies via its Korean subsidiary in order to shun regulations,’’ a police source said.

As a result, a total of 2,944 patents relating to the 2.5-generation CDMA technologies now belong to the foreign-based entity.

As far as CDMA is concerned, Korea has been second to none in launching commercial services at every level as well as making huge profits through cell phone exports.

Early last year, Beijing Orient Electronics group took over Hydis, the liquid crystal display (LCD) affiliate of once sash-strapped Hynix Semiconductor, to establish BOE Hydis.

LCD is another segment where Seoul-based firms _ LG.Philips LCD and Samsung Electronics _ maintain global supremacy with Chinese firms trailing at a relentless speed.

voc200@koreatimes.co.kr