Why Samsung Owns EVERYTHING: The Dark Truth
Summary
TLDRSamsung's journey from a small trading company in 1938 to a global conglomerate is a tale of ambition and controversy. Founder Lee Byung-chul's vision saw Samsung diversify into electronics, construction, and even healthcare, becoming a symbol of South Korea's economic growth. However, the company's close ties to the government, including favorable loans and tax breaks, and its legal troubles, including bribery and corruption charges against its leaders, reveal a complex story of success and scandal.
Takeaways
- đ Samsung was founded in 1938 by Lee Byung-chul as a trading company dealing in noodles, dried fish, and vegetables.
- đ The name 'Samsung' means 'three stars' in Korean, symbolizing something big, powerful, and everlasting.
- đ„ The Korean War had a devastating impact on Samsung and the country, leading to a shortage of commodities and reliance on imports.
- đ Lee Byung-chul diversified Samsung's business into sugar refining and textiles, which allowed the company to survive and expand.
- đŠ Samsung's expansion into various industries like insurance and retail made it the largest insurance provider in South Korea and a major player in the economy.
- đ Samsung's entry into the electronics market in 1968 led to rapid growth, becoming the world's top black and white TV manufacturer within a decade.
- đ To reduce reliance on imported components, Samsung acquired a semiconductor company, expanding its product offerings and control over the supply chain.
- đ Samsung's diversification also included heavy industries like shipbuilding and construction, with projects like the world's tallest building, the Burj Khalifa.
- đ€ The South Korean government's support through favorable loans and tax breaks played a significant role in Samsung's rapid expansion.
- đ Samsung's success story has a controversial side, with allegations of corruption, bribery, and close ties to the government that may have stifled competition.
- đ„ The Samsung Galaxy Note 7 disaster in 2016, where phones caught fire due to rushed production and design flaws, cost the company over $5 billion and damaged its reputation.
Q & A
What was the original business of Samsung when it was founded in 1938?
-Samsung began as a small trading company that sold noodles, dried fish, and local vegetables.
What does the name 'Samsung' mean in Korean, and why was it chosen?
-In Korean, 'Samsung' means 'three stars'. The founder chose this name because the number three is popular in Korea, representing something big and powerful, and 'star' symbolizes something everlasting.
How did the Korean War impact Samsung's early business?
-The Korean War had a devastating impact on Lee's business and the entire country, leading to a shortage of commodities and heavy reliance on imports.
What was the first major diversification step taken by Lee after the war?
-Lee's first major diversification step was creating a sugar refinery, followed by opening the largest woolen mill in the country.
Which industry did Samsung enter in 1968, and what was their first product in that industry?
-Samsung entered the electronics industry in 1968, and their first product was a 12-inch black and white TV.
Why did Samsung decide to buy a semiconductor company?
-Samsung bought a semiconductor company to have full control over their supply chain and reduce reliance on importing small components from abroad.
What is the significance of Samsung Heavy Industries in the global shipbuilding industry?
-Samsung Heavy Industries specializes in making giant ships and is one of the largest mega ship builders in the world.
Which division of Samsung is responsible for constructing infrastructure like roads, tunnels, bridges, and buildings?
-Samsung Construction and Trading is responsible for constructing infrastructure.
What controversy is associated with the Samsung Note 7 smartphone in 2016?
-The Samsung Note 7 smartphone was involved in a controversy due to multiple incidents of the device catching fire, which cost Samsung over five billion dollars and significant reputational damage.
How did Samsung's relationship with the South Korean government contribute to its rapid expansion?
-Samsung's rapid expansion was facilitated by the South Korean government through favorable loans, special tax breaks, and protection from competition, which were largely due to the strategic political connections made by Samsung's founder, Lee.
What is the term 'Chaebol' and how does it relate to Samsung in the context of South Korea's economy?
-Chaebol is a Korean term referring to family-owned conglomerates that have built giant empires through close government ties. Samsung is the largest Chaebol in South Korea, and its influence over the government, media, and the country is significant.
Outlines
đ Samsung's Humble Beginnings and Visionary Expansion
Samsung's origin story dates back to 1938, starting as a small trading company dealing in noodles, dried fish, and local vegetables. Its founder, Lee Byung-chul, had a vision that transformed Samsung into a global powerhouse. The company's name, meaning 'three stars' in Korean, symbolizes its aim to be big, powerful, and everlasting. Despite the Korean War's devastating impact, Lee diversified the business into various industries such as sugar refining, textiles, and insurance. Samsung's expansion into electronics in 1968 led to its dominance in black and white TV manufacturing and further into home appliances and personal computers. The company's strategic acquisition of a semiconductor company allowed it to control its supply chain and sell chips globally, even to rivals like Apple.
đ Samsung's Controversial Growth and Government Ties
Post-Korean War, South Korea's government supported large businesses like Samsung to boost the economy, providing them with favorable loans and tax breaks. This preferential treatment allowed Samsung to grow rapidly, often at the expense of smaller businesses. Samsung's founder, Lee, leveraged political connections to secure special treatment, including American relief money funneled directly into the company. The government's support, while beneficial for Samsung's growth and employment, raised concerns about the economy's over-reliance on a single company. The controversy deepened with allegations of bribery, corruption, and tax evasion against Lee's successors, who were repeatedly pardoned despite convictions, highlighting the deep ties between Samsung and the government.
đ± The Samsung Galaxy Note 7 Crisis and Its Aftermath
In 2016, Samsung faced one of its biggest crises with the Galaxy Note 7, which was prone to catching fire due to rushed development and aggressive deadlines. The company's slow response and attempts to suppress information backfired, leading to a costly recall and significant reputational damage. The incident was linked to Samsung's rivalry with Apple, where executives aimed to innovate and avoid being seen as mere followers. Despite this disaster, Samsung continued to innovate and achieve success, generating more revenue than companies like Google and Microsoft, and maintaining its presence in various markets.
đ Samsung's Ongoing Success and the Shadow of Controversy
Despite controversies and product disasters, Samsung has continued to innovate and achieve success. The company's innovative products, such as the folding phone, and its revenue generation demonstrate resilience. However, the narrative of Samsung's success is shadowed by its deep connections with the South Korean government and allegations of corruption and unfair practices. The company's influence over the government and media raises questions about its accountability and the potential impact on the nation's economy and democracy.
Mindmap
Keywords
đĄConglomerate
đĄDiversification
đĄKorean War
đĄSemiconductor
đĄSupply Chain
đĄGovernment Support
đĄChaebol
đĄCorporate Scandal
đĄGalaxy Note 7
đĄProduct Recall
đĄMarket Competition
Highlights
Samsung's origin as a small trading company in 1938, selling noodles, dried fish, and local vegetables.
Transformation of Samsung into one of the world's most valuable companies with a diverse range of products and services.
The visionary leadership of Lee Byung-chul, who founded Samsung at the age of 28 and aimed for a big and powerful business.
The impact of the Korean War on Samsung and the subsequent diversification into industries like sugar refining and textiles.
Samsung's expansion into electronics in 1968 and becoming the world's number one black and white TV manufacturer within a decade.
The strategic acquisition of a semiconductor company to control the supply chain and enter the global chip market.
Samsung's involvement in unexpected industries such as shipbuilding, construction, and theme parks.
The construction of the world's tallest building, the Burj Khalifa in Dubai, by Samsung Construction and Trading.
Controversial government support and favoritism towards Samsung, including tax breaks and easy financing.
The political connections of Samsung's founder Lee, which led to special treatments and rapid business expansion.
The controversy surrounding Lee Kun-hee's legal issues and his relationship with the South Korean government.
Samsung's significant influence on South Korea's economy, making up about 17% of the GDP in 2014.
The Note 7 disaster in 2016, where Samsung's rush to market led to a product safety crisis costing over $5 billion.
Samsung's response to the Note 7 crisis, including the initial slow reaction and subsequent recall of the product.
The ongoing rivalry with Apple and the pressure to innovate, which contributed to the Note 7's development issues.
Samsung's resilience and continued success despite product disasters and controversies.
The company's innovative spirit, exemplified by the development of new products like the folding phone.
Transcripts
samsung began in 1938 as a small trading
company that sold noodles dried fish and
local vegetables
back then it was impossible to imagine
that samsung would transform into one of
the world's most valuable companies
produces so much more than you would
think samsung have created skyscrapers
roads hospitals clothes robots and far
far more
they even had an aerospace division that
created helicopters and tanks for the
military but we'll get to all that
first let's introduce libyan chol who
founded samsung at the age of just 28.
he says that one night he had a panicked
realization that he was wasting his life
and that it was time to set a clear goal
for himself and so he committed at that
moment to building a business
despite samsung's humble beginnings
selling groceries lee always had a much
bigger vision he chose the name samsung
as in korean it means three stars whilst
many of us three stars may sound like a
mediocre product review in korea the
number three is very popular as it
represents something big and powerful
and star is used to represent something
everlasting
big powerful and everlasting are
certainly perfect words to describe what
samsung has now become but at first it
didn't look like samsung was even gonna
survive
as the korean war had a devastating
impact on lee's business and the entire
country
in fact after the war there was a
shortage of commodities and korea was
heavily relying on imports so lee
decided to diversify his business and
create affordable goods for the public
he started by creating a sugar refinery
and then using the profits from that he
opened the largest woolen mill in the
country this allowed samsung to expand
into textiles and they began creating
finished products like clothing since it
was diversification that allowed samsung
to survive lee decided to keep pursuing
this strategy more aggressively and
reinvested the money he made into other
new areas like opening a department
store and getting into the insurance
business in fact to this day samsung is
the largest insurance provider in south
korea with all of this rapid expansion
of his business it wasn't long before
lee was the richest man in the country
and he was about to get a lot richer
in 1968 samsung executives had a meeting
where they decided the next market to
enter electronics
a year later samsung electronics was
fully set up and they created a 12-inch
black and white tv within a decade
they'd become the world's number one
black and white tv manufacturer thanks
to their efficient assembly line
production and this success led them to
start producing all kinds of home
appliances like in 1979 they began
making microwaves in 1980 they started
producing air conditioners in 1981 they
produced a million color tvs and in 1983
they got into making personal computers
but they soon realized that to produce
all of these electronic goods they were
heavily reliant on importing so many
small components from abroad so they
bought a semiconductor company to have
full control over the supply chain
themselves they not only used these
chips in their own products but started
selling them globally to other
electronics manufacturers opening yet
another product line for samsung in fact
one of their many customers is apple who
have used samsung memory chips in their
iphones despite the fact the two
companies have become fierce rivals in
the smartphone market which we'll get to
shortly as well but what's really
fascinating about samsung is all the
industries they've expanded into that
you never normally hear about
for example under a division called
samsung heavy industries samsung
specialise in making giant ships and are
one of the largest mega ship builders in
the world there's also another division
called samsung construction and trading
that makes roads tunnels bridges and
buildings amazingly the world's tallest
building the burj khalifa in dubai was
built by samsung and before that samsung
was also involved in making the previous
tallest building in the world they even
own south korea's largest theme park
called everland have their own hotels
and own a place in korea called samsung
town so whilst many of us probably know
the samsung brand from its success in
mobile phones and consumer monitors and
gadgets that's barely the tip of the
iceberg we haven't even mentioned
samsung's non-profit foundation which
includes a university and a hospital
called samsung medical center yep
samsung even have a hospital however the
fact that samsung have expanded into so
many industries may sound like an
incredible business success story a
young entrepreneur starting with a
simple idea and then diversifying into
more and more markets and gradually
building an empire
but that is certainly not the full story
the real truth is much more
controversial
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following the korean war south korea was
in a very bad state not producing or
exporting many goods the president was
eager to expand the economy and decided
to support large korean businesses by
offering them very easy financing and
protecting them from competition in
other words samsung and a couple of
other big south korean businesses got
given extremely favorable loans special
tax breaks and a bunch of their support
measures from the government to help
them expand the idea was that by helping
these big companies grow a lot larger it
would help the overall country's economy
for example right after samsung started
working on electronics the south korean
government banned several other
countries like japan from selling
electronics in south korea pushing
consumers towards samsung products
instead around this time the south
korean government also reduced taxes by
50 on companies operating in the
electronics business but here's the
thing samsung was by far the biggest
company in the industry at the time by a
huge distance and so they benefited way
more than anyone else in fact the
government was essentially funneling
american relief money that south korea
received after the war straight into
samsung and this is what allowed them to
expand so rapidly and this was all
thanks to samsung's founder lee and his
ability to make very strategic political
connections like becoming good friends
with south korea's presidents as a
result of this friendship samson
continually got special treatments like
they didn't have the same export limits
other companies had there was also
another incident where government
associated banks started offering lee
extremely generous credit terms so that
samsung had more money to fund their
expansion plans but when lee got the
money from these banks he used some of
that money to stop buying those same
banks who had given him the credits now
to be fair it's true that by the
government helping samsung so much in
many ways it helped the whole of south
korea's economy especially because
samsung employed huge amounts of people
as it grew but the government's
favorable treatment of samsung often
ended up hurting other smaller korean
businesses how could anyone compete with
a government-supported conglomerate with
such vast resources and wealth samsung
could crush anyone they wanted when they
entered a new market which meant that
some viewed lee as a symbol of
corruption it could also be argued that
by helping samsung so much the south
korean economy is now over-reliant on
one single company if things go bad for
samsung it could have a terrible effect
on the entire nation especially because
samsung is so heavily involved in so
many different industries in fact a
study in 2014 found samsung composed
about 17 of the entire south korean
economy you see samsung is one of south
korea's tables a korean term that refers
to family-owned conglomerates that have
built giant empires through close
government ties there are a few others
like lg and hyundai but samsung is the
largest and basically because these
business empires are kept within the
family it means that just a few families
in south korea had a vast amount of the
country's wealth power and influence so
when samsung's founder libyan chol died
in 1987 his son li khan he took over the
business and this is where samsung's
ties to the government get even more
controversial firstly in 1996 lee khan
he was charged with bribing a former
president however because of samsung's
government connections the president at
the time pardoned him with no further
action taken then in 2008 lee kan-hee
was accused of managing a political
slush fund which was used to bribe
prosecutors and politicians he was found
guilty of tax evasion and embezzlements
to which he apologized and stepped down
from the company but there was no jail
time within just two years the new south
korean president had pardoned him and
lee khan he went back to work as the
chairman of samsung as if nothing had
happened so on two separate occasions
lee kun hee had been charged with
bribery corruption and tax evasion and
on both occasions he received no jail
time and was pardoned of all wrongdoing
despite the overwhelming evidence this
just shows how tightly samsung and the
government are connected even when
publicly convicted of a crime the
president can just reverse it and this
goes even further in a controversial
book entitled think samsung written by
samsung's former chief legal counsel it
was alleged lee khan he stole around 9
billion from samsung's subsidiaries
destroyed evidence and bribed government
officials to guarantee his son would
succeed him as the head of samsung in
addition several presidential candidates
and aides have reportedly been given
bribes by samsung now samsung denied
some of these claims and most of south
korea's media refused to even mention
this book because samsung is such a huge
part of the country that an attack on
samsung can be perceived as an attack on
south korea itself plus it's very
possible the media simply didn't want to
get on samsung's bad side given how
powerful the company is for example in
an article titled south korea the
republic of samsung the author suggested
that samsung's chairman is more powerful
than the president of south korea and
that many korean people have come to
think of samsung as invincible and above
the law essentially the company has vast
influence over the government media and
entire country and just to make things
even more absurd when eventually lee
khan he's son took over after him he was
also found guilty of embezzlement and
bribing politicians just like his dad
had been now i really want to stress
that we're talking about the actions of
a small number of individuals here
samsung is a giant conglomerate of
hundreds of thousands of employees so
it's obviously unfair to tarnish all of
samsung with the actions of just a
couple of people plus clearly samsung
have done plenty of good in south korea
as well but i do think it's interesting
once you see the kind of shady backroom
dealings and bribery that went on and
the deep ties to the government suddenly
samsung's success story isn't quite the
fairy tale it may have seemed in chapter
one however we're not quite done yet
because no story of samsung would be
complete but i was looking at one of the
biggest disasters in samsung's entire
history
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imagine waking up in your room only to
find it filled with smoke there's an
awful smell and you're struggling to
breathe you look over and see that your
samsung note 7 smartphone is on fire
scenes like this played out multiple
times around the world in 2016 and
airlines soon banned the phone from
flights what's concerning is samsung
knew about several of these incidents
and initially did nothing
they were extremely slow to react and it
was only as more phone explosions
happened that the media picked up the
story and samsung was forced to stop
production and recall the products
this cost them over five billion dollars
not to mention all of the reputational
damage to make things even worse the
initial replacement product samsung
issued also had the same overheating
problem that's because samsung initially
blamed the battery as being the issue
but actually it was more complex than
that it wasn't down to just one faulty
component that could easily be swapped
out but instead linked to the internal
design and the way the components in the
device were basically crammed too
closely together but in many ways the
real root of the problem can be traced
back to samsung's ongoing battle with
apple if we rewind back to 2011 apple
was suing samsung claiming they
basically copied the design of their
iphone demanding billions of dollars
while steve jobs publicly called samsung
a copycats samsung felt this was
ridiculous given that apple had taken
plenty of inspiration from competitor
products themselves over the years but
samsung executives were determined to
create something new and change the
narrative of samsung being followers
instead of leaders and thus they
launched their galaxy note series a
cross between a tablet and a smartphone
but for the note 7 model samsung
executives wanted to add in lots of new
features and they also demanded tight
deadlines with very aggressive
specifications
samsung engineers recall that the
pressure to make the device on time was
extremely intense and that it became a
chaotic rush to finish the product by
the deadline
they didn't realize it at the time but
basically in the race to try and be
apple samsung had rushed the product's
development too much they'd cram the
note 7 with too many features and not
spend enough time on quality control of
course before realizing the issues they
sold millions of these dangerous phones
all around the world and spent gigantic
sums of money on marketing it and as if
this hadn't been a big enough pr
disaster already samsung then tried to
suppress information about the whole
thing for example when people on youtube
created parody videos and grand theft
auto with characters using galaxy note
7s as exploding grenades samsung
copyright strike the videos despite
having absolutely no rights to do so
this backfired further as their attempts
at censorship created yet more buzz and
controversy around the whole story
however despite all of the drama both
with their products and with their
owners samsung have clearly continued to
have incredible success they've created
innovative products like their folding
phone they've generated more revenue
than companies like google and microsoft
and they'll no doubt continue to keep
entering all kinds of new markets given
the very humble beginnings of how
samsung started it really is quite
amazing what the company has now become
and i guess it's proof that with enough
hard work anyone can turn their small
business into a giant empire
as long as you're good friends with the
president of your country and they're
willing to funnel you millions of
dollars of taxpayer money now if you
want to hear some really controversial
business stories i think you'll enjoy
these videos right here just take your
pick and hopefully i'll see you there
thanks for watching this video to the
end and supporting this channel you are
a legend and i'll see you in the next
one
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