Three stars – three complex stories – Hi-Tech – Kommersant

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The entire history of the South Korean company Samsung can be divided into three stages. The company, founded almost a hundred years ago by a South Korean farmer, had to go out of business twice. However, each time she managed to revive and become even more powerful.

Warehouses are burning, factories are burning

Samsung’s history begins in the 1930s, an era when Korea was unified but under Japanese occupation. The colonial period in the history of Korea was characterized, on the one hand, by total discrimination against Koreans, and, on the other hand, by a powerful economic upsurge. Agriculture, then a pillar of the economy, was significantly modernized. Finally, industry actually originated in the country – dozens of factories were replaced by thousands.

In such conditions, in 1938, a native of a farming family, Lee Byung-chul, founded his own company in the city of Daegu – Mitsubishi Trading Company in Japanese style or Samsung Sanghoe – in Korean. At a time when all Koreans were almost forced to change their own names to Japanese, there was nothing surprising in the duality of the company’s name. Literally, Samsung means “three stars” in Korean. In a figurative sense, it means something powerful and infinitely shining. It was almost a literal translation of Mitsubishi.

Despite the big name, Lee Byung-chul’s company was just a small warehouse that traded in rice flour of its own production, rice, sugar, pasta, as well as dried fish and seafood.

Much of this was grown and produced either in Daegu itself or in its surroundings. In addition, some Samsung products were exported to Manchuria. And this was not surprising either. Manchuria was a puppet state controlled by Japan. And almost everything that was produced by Korea was then exported to Manchuria. However, unlike the vast majority of his compatriots, Lee Byung-chul managed, under the total control of the Japanese authorities, to establish an independent channel for the supply of his goods to Manchuria and China.

Byung-chul’s food trade brought him considerable profits, and World War II put an end to Japanese colonial rule in Korea. Even the division of the country into two zones of responsibility between the Soviet Union and the United States, it seemed, could not interfere with the growth of the company. Yi Byung-chul decides to take the next step in her development. In 1947, Samsung moved to Seoul for the first time.

The move of the company from a provincial town to the capital of the future South Korea (which will appear on the world map in August 1948) demonstrated the seriousness of Lee Byung-chol’s intentions. The entrepreneur started expanding his business. In particular, he bought a plant for the production of alcoholic beverages – rice vodka and beer were very popular with the US military, who landed in Korea after the surrender of Japan. By the end of the 1950s, Byung-chul hoped to finally enter the international market by trading with the Americas.

But already in 1950, the Korean War began, which took everything from Byung-chul – both the factories and the company’s warehouses were burned or looted. And the entrepreneur himself had to flee from Seoul to stay alive.

Above good

Lee Byung-chul had to start all over again. However, the losses that he suffered due to the war did not allow him to build a large-scale business alone. He teamed up with another entrepreneur, Cho Hong Jai. In January 1951, they registered a new trading company in Pusan ​​- Samsung Trading Corporation. But this time, after a couple of years, Byung-chul returns his business to Seoul.

In 1954, the first Samsung textile factory, the largest in the country at that time, began operating in Daegu. And in August 1955, the Samsung sugar factory appeared in Busan.

Both plants become starting points in the history of new Samsung divisions. The partnership with Hong Jai turned out to be short-lived – after a few years, due to disagreements, he left Samsung Trading Corp., and their joint venture was divided into several companies. This is how the Hyosung Group, Hankook Tire and finally the Samsung Group were born.

Most likely, Byung-chul would not have been able to rebuild his corporation so quickly if it were not for the patronage of the authorities. The government of South Korea, in an effort to ensure the country’s economic growth as high as possible and to carry out its industrialization, provided all kinds of support to large industrial companies. They were protected from external competition, provided with loans and benefits. Thanks to this, Samsung covered all new markets for itself.

In the late 1950s, the company acquired three of Korea’s largest commercial banks, as well as an insurance company and cement and fertilizer firms.

Logistics, real estate, retail, insurance and securities trading appeared in the list of Samsung’s activities.

Byung-chul became one of the most powerful people in the country. So much so that he was close to President Lee Syngman himself. Ironically, this is what almost led to another collapse of Samsung.

In April 1960, mass protests began in South Korea against Syngman Rhee. He was accused of falsifying the presidential election. The 84-year-old ruler managed to win them with a score of 100% of the vote. Simply because he was the only candidate. The people demanded repeated elections and the departure of the authoritarian ruler. As a result, what began as peaceful protests turned into a military coup and the rise to power of General Park Chung-hee a year later.

Byung-chul himself was accused of tax evasion, illegal profiteering, and illegal sponsorship of Lee Seung-man’s campaign. During the coup, the businessman was in Japan, and therefore escaped arrest. He later met with the new president. As a result of the meeting, Chol was granted amnesty, and in return he had to transfer part of his business to the government and build a fertilizer plant. The promise was fulfilled: the company became one of the industrial giants of Korea, and in the late 1960s, Samsung first thought about switching to the production of electronic equipment.

Korean Farmer’s Eternal Sunshine

In January 1969, Samsung Electric Industries was established. However, despite being one of Korea’s most powerful industrial tycoons, Byung-chul had no experience in electronics. And therefore, in order to master this area, he decided, as in the case of the creation of Samsung Trading Corp., to resort to the help of more experienced partners. But this time it turned out to be not one of the compatriots, but the Japanese.

As early as December 1969, Samsung Electric signs a joint venture agreement with Sanyo and Sumitomo. It took up the production of televisions, calculators, refrigerators, air conditioners and washing machines. And it is this joint venture that is the direct predecessor of Samsung Electronics.

In 1970, Samsung creates a joint venture with another Japanese corporation – NEC and begins to produce household and audio and video equipment. This joint venture would later become Samsung SDI, a division of the display and battery group.

And in 1973, Samsung and Sanyo formed Samsung-Sanyo Parts, the forerunner of Samsung Electro-Mechanics.

The partnership of Byung-chul with Japanese corporations, of course, caused strong dissatisfaction with Korean manufacturers, who even turned to the government of the country with a demand to ban Samsung from creating a joint venture with the Japanese. In the end, they were just recently the colonizers of Korea, and now they could crush the Korean market for electronics and household appliances. For such giants as Sanyo and NEC, this would not be difficult, given the technological backwardness of Korean manufacturers. It was possible to reassure representatives of the Korean industry only when the government and Byung-chul promised that all Samsung products in this area would be sent exclusively for export.

This commitment has not prevented Samsung from becoming one of the world leaders in the electronics market. Moreover, back in the 1970s, Lee Byung-chul’s company moved from black-and-white televisions and kettles to more sophisticated technology. In 1974, the company acquires a 50 percent stake in semiconductor developer Korea Semiconductor, one of the pioneers in the Korean chip manufacturing sector. And later, Samsung acquired Korea Telecommunications, a manufacturer of electronic switching systems. These two purchases eventually led to the creation of Samsung’s semiconductor division.

In 1978, Lee Byung-chul created the Samsung aerospace division, and in 1985, Samsung Data Systems appeared, a provider of corporate information technology services, including consulting, technical services, and outsourcing services.

In the 80s, the company is working on the creation of its first mobile phone. That’s just the brainchild of Samsung will become a symbol of a new era in the history of the company – without Lee Byung-chul.

The founder of the South Korean tech giant died in 1987, just a year before the launch of the Samsung SH-100 mobile phone.

The first phone from Samsung was an outright failure. The dominance of the Korean manufacturer in this market will come much later – only in 2012, when Samsung for the first time manages to overtake Nokia, the leader in this indicator since 1998, in terms of sales.

But in the semiconductor market, in the development of which Samsung has invested billions of dollars since the mid-1980s, the Korean company became a world leader in the early 1990s. In 1992, Samsung became the largest manufacturer of memory chips, and in the microchip market, the company was then second only to the American Intel.

Thus, a small grocery store of a Korean farmer in a provincial town finally turned into a high-tech corporation with dozens of divisions in various industries.

Kirill Sarkhanyants

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