by Zean Villongco
Samsung, one of the biggest names in smartphones started off with a very different inventory.
So what do fish and vegetable trading, sugar and flour milling, textile, life insurance, paper products, washing machines, microwave ovens, petrochemicals, aircraft engines, heavy machinery, television, and semiconductors have in common? If not some absurd or bizarre correlation, one would most likely expect a non-response to the question. Hardly anyone would surmise that Samsung, a name that today has become synonymous with the latest and most cutting-edge mobile devices, has dealt its hand in all of them. Little do most people know that the global giant’s roots are far removed from what the company is preponderantly known for today.
Born in 1910, a time when imperial Japan formally annexed Korea, Samsung’s founder Lee Byung-chul was the son of a wealthy landowning Korean family. Lee’s entrepreneurial storyline pretty much follows those of many other entrepreneurship luminaries who graduated from the school of hard knocks.
Lee attended college at Waseda University in Tokyo but did not complete his degree. Then in 1938, at the age of 28, he founded Samsung Sanghoe. First based in Daegu, Samsung started out as a small trading company dealing with the exportation to Manchuria and Beijing of locally-grown grocery products such as dried fish, vegetables, fruits, and noodles. From a start-up capital of only 30,000 won, which today would be equivalent to 25 US dollars, and an initial workforce of forty employees, Lee’s company prospered, prodding him to move the company’s head office to Seoul in 1947. He however was forced to leave Seoul several years later when the Korean War broke out.
Circumstances thereafter prompted him to expand the company into other industries. Then in 1954, Lee likewise founded the textile firm Cheil Mojik, which later on became Korea’s largest woolen mill.
Lee’s serial entrepreneurial acumen and drive became unstoppable in the succeeding decades as he incessantly steered Samsung’s enterprises into a wide range of industries, acquiring and creating different business establishments including a hospital, a paper manufacturing plant, a life insurance company, department stores and many others. A slew of subsidiaries were born, including Samsung Fire and Marine Insurance, Samsung Life Insurance, and Samsung Everland. But it was in 1969 when Samsung-Sanyo, which later became Samsung Electronics as we know it today, was established.
Samsung Electronics started catering to the international market in the 1970s with the corporation’s acquisition of half of Korea Semiconductor, making Samsung the leading electronics manufacturer in the country. The subsidiary’s first product was a black-and-white television, the sales of which skyrocketed to around 4 million units within less than a decade. Aside from television units, Samsung produced washing machines, refrigerators, and microwave ovens. It was also during the 1970s that the Samsung Group, under then Korean President Park Chun Hee’s government policy of rapid industrialization, further launched a number of enterprises in ship building, petrochemicals and aircraft engines.
In the 1980s, Samsung started further establishing ties with the West as the company exported more of its products to North America and teamed up with British Petroleum to form Samsung BP Chemicals. Samsung then likewise began to focus even more on electronics and telecommunications with its production of color television, videocassette recorders, tape recorders, communication switchboards, and personal computers. The decade also marked the end of an era as founder Lee died of lung cancer in 1987.
No entrepreneurial success would be complete without stories of failure, and Samsung’s was no exception. Samsung ventured into mobile phone technology in the 1980s and 1990s, producing its first ever mobile phone, the SC-100, which was made for in-car use only. The product was reportedly plagued by quality issues, and the succeeding handheld unit, the SH-100, fared no better. According to company legend, when chairman Kun-Hee found out the issue, he visited the factory where the phones were made and reportedly had the entire inventory – hardware worth around USD 50 million – burned. After that initial slip up, Samsung then began taking mobile communication more seriously, and, in the late 1990s, released one of its first Internet-ready phones. From then on, mobile technology and electronics would eventually grow into Samsung’s most profitable businesses.
Today, Samsung stands as an indomitable powerhouse, producing around a fifth of South Korea’s total exports. The company holds a colossal influence on the country’s economic development, politics, media and culture, and has been a major driving force behind the “Miracle on the Han River,” South Korea’s period of rapid economic growth following the Korean War. Its name meaning “three stars,” which in Korean represents something “big, numerous, and powerful,” Samsung has come a long way from its humble beginning in trading fish and vegetables.
Illustration by Arom Liban
This article was first published in the November-December 2016 issue of adobo magazine.
