When you hear the word Samsung, chances are, you will be transported to the days of flip phones and simpler times. Nowadays, Samsung has bloomed into a global company comparable to the likes of Apple, Google, and Microsoft. These huge companies have been competing with each other in recent years to bring the latest, edgiest, and best technology to their customers. What many don’t know is that behind the billion-dollar conglomerate, Samsung is, at its core, still a family business — almost a century after it was first founded.
First Generation: The Patriarch that Started it All
(1938 — 1970)
A hanja word that translates to “three stars”, Samsung was named by founder Lee Byung Chul with the goal of making the company powerful and everlasting like the stars in the night sky. In 1938, Lee Byung Chul opened a grocery trading store one March morning in Taegu, South Korea. The main business of the trade? Dried, fish, noodles, and other goods produced locally in and around the city are sent on their merry way to China and its dozens of provinces.
Withstanding the brutal Korean War from 1950 to 1953, Lee expanded his business into textiles and opened the biggest woolen mills in Korea. With the continued rise of industrialization in the country, Lee takes advantage of this to help Korea’s economy recover from the significant damage wars inevitably cost. With more luck on his side, the Korean government put up new protection policies that shielded local conglomerates or chaebol against competition and financial bankruptcy, something that also greatly benefited Lee and his business.
In the late 1950s, Samsung grew even more exponentially, acquiring three of Korea’s largest commercial banks, an insurance company, and firms that made cement and fertilizer. A decade later, they added an oil refinery, a nylon company, a department store, and more insurance firms to their impressive lists of acquired ventures. In 1969, Samsung first entered the electronic industry by launching its black-and-white televisions. They then proceeded to form several electronics-focused divisions: Samsung Electronics Devices, Samsung Electro-Mechanics, Samsung Corning, and Samsung Semiconductor and Telecommunications.
When the 1970s rolled in, Samsung has begun to export their home electronic products overseas. They had already acquired a 50% stake in Korea Semiconductor and were only growing bigger as a major manufacturer in the country. During this time, the company also expanded its textile manufacturing process to turn the business into a full production line, from sourcing the raw products up to the exportation of the finished products. Their new subsidiaries such as Samsung Heavy Industries, Samsung Shipbuilding, and Samsung Precision Company (Samsung Techwin) were established during this time as well.
With this speed in progress, you can only imagine the pride and joy Lee Byung Chul boasted over the empire he had built in his tiny hometown. Unbeknownst to even Lee Byung Chul, this was only the start of what would become a global household name that would stand proud against the test of time. Dedicating his entire life to growing his business and promoting his country’s economy, Lee Byung Chul passed in 1987 and handed over the crown and title to his son, Lee Kun Hee.
Second Generation: A Shocking Scandal
(1970 — 2008)
Following his father’s death, Lee Kun Hee became the head of the leading group of the company. Samsung was split into five business groups — Samsung Group, Shinsegae Group, CJ Group and Hansol Group, and JoongAng Group, with Lee Kun Hee spearheading the electronics division. The other groups were led by his siblings, making sure Samsung remained, at its core, a family-run business.
Despite Korea being regarded as a predominantly “conservative” country, Lee Kun Hee wanted to instill modern world views in the company to keep up with the global competition. He famously told his executives at the time, “Change everything but your wife and kids,” emphasizing that family must always come first, even in business.
He then formed a new management concept wherein several practices were adopted: subordinates were encouraged to point out their leaders’ shortcomings and errors, the quality of products over the quantity produced should be put above all else, and women became part of managerial and senior executive boards. These practices discouraged highly bureaucratic practices that were fairly common in large companies. It brought above fresh change and more than likely kept his employees happy and content with their work culture.
Thanks to Lee Kun Hee’s cultural shakeup of the company, Samsung was able to keep up well with its global competitors and climbed up even more in the market. It was not all sunshine and rainbows, however, when a scandal that left a sour taste in everyone’s mouth broke. Lee Kun Hee was found guilty in 1996 of bribing former president Roh Tae Woo. Sentenced to two years in prison, he was pardoned in 1997 after a judge commuted his sentence. This is only one case of many patent-infringement suits and bribery cases that would soon plague the Lees and their ever-expanding empire.
Nevertheless, these scandals did not stop Samsung from climbing into the top five positions in global market share. From semiconductors to computer monitors to LCD screens, Samsung was well on its way to becoming a household name in every country all over the world. The 2000s gave birth to Samsung’s Galaxy smartphones, a product line that is now still often compared to others of its kind like Apple’s iPhones and Google’s Pixel phones. The Galaxy line has expanded to tablets, smart watches, smart TVs, smart refrigerators, and pretty much whatever else house furniture you can put a smart chip on.
In 2008, another scandal broke out that would make Lee resign as chairman of Samsung. He was indicted on charges of breach of trust and tax evasion as a part of an elaborate scheme and was subsequently fined approximately $80 million. In addition to this, he was sentenced to three years of suspended jail time. A year later, he was pardoned by the South Korean government as he was the key to a successful bid for the 2018 Winter Olympics. Two years after that in 2010, he was reinstated as Samsung Electronics’ head and eventually returned as chairman of the Samsung Group.
Despite the many political scandals Lee Kun Hee was involved in, he always seemed to find a way out of it and continued to grow Samsung and steer it in only one direction: up. Not long after he came back as chairman, Lee Kun Hee suffered a heart attack in 2014 that left him debilitated and unable to run his conglomerate. Although he retained his title and posts, he had to pass on the baton to his son, Lee Jae Yong.
Third Generation: The Legacy (and Infamy) Continues
(2014 — Present)
As the de facto leader of the Samsung Group after his father’s illness, Lee Jae Young had humungous shoes to fill. The responsibility of continuing the family business fell on his shoulders. Although he has filled the role since his father fell ill, he was only officially appointed as executive chairman in 2022, two years after the position was vacant following Lee Kun Hee’s passing in 2020.
However, a few years before that, Lee Jae Young also had to deal with political scandals, much like his father before him. In 2017, he was charged and convicted of bribing a confidante of the once-imprisoned former president, Park Geun Hye. He was released a year later in 2018 after his sentence was suspended. During his time in prison, Samsung was led by Lee Jae Young’s three co-CEOs.
Unfortunately for this third-generation chairman, his suspension would be overturned a few years later. In 2021, a retrial found him guilty of financial crimes and bribery which sentenced him to two and a half years in prison. However, Lee Jae Young’s previous time served will be counted towards his new sentence, effectively reducing serving time. The bad news for this almost century-old family business? Sales have been dropping lately, and not minimally either. Soaring inflation, rising interest rates, and a more than depressing current economy has made demand scarcer than usual for Samsung’s sought-after products.
Why Samsung is Well-Loved All Over the World
Although Samsung has put South Korea’s name out there and has immensely helped to boost the country’s economy, the political scandals and indictments of two of its executive chairmen cannot be ignored and should be accounted for. Samsung’s influence on popular culture, however, cannot be denied. Their smart products are particularly popular as the best option for quality, price, and innovation. People of all ages love their gadgets and will most likely continue to demand their products for as long as Samsung delivers.
As the crown jewel of South Korea, Samsung has been a and still is a household name, first, locally in its origin country, and then globally as it reached peaks that other homegrown businesses can only dream of. Starting as a humble trading business in the small town of Taegu, one hardworking man built an empire and a legacy so monumental that three generations of his bloodline are still running circles around global competitors. Whether or not you use Samsung’s products, this family business is here for the long run and for generations more to come.
Sources
- https://apnews.com/article/south-korea-lee-jae-yong-a4cec699b89fa7ecc17b25d5883407db
- https://www.reuters.com/article/us-samsung-lee-accounts-idUSKBN1FS0CL
- https://www.bbc.com/news/world-us-canada-62501514
- https://www.washingtonpost.com/business/2022/10/27/samsung-lee-jae-yong-chairman/
- https://www.bbc.com/news/business-55674712
