Why Samsung Owns EVERYTHING: The Dark Truth

Summary

Samsung'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

• 📚 Samsung was founded in 1938 by Lee Byung-chul as a trading company dealing in noodles, dried fish, and vegetables.
• 🌟 The name 'Samsung' means 'three stars' in Korean, symbolizing something big, powerful, and everlasting.
• 💥 The Korean War had a devastating impact on Samsung and the country, leading to a shortage of commodities and reliance on imports.
• 🔄 Lee Byung-chul diversified Samsung's business into sugar refining and textiles, which allowed the company to survive and expand.
• 🏦 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.
• 📈 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.
• 🔌 To reduce reliance on imported components, Samsung acquired a semiconductor company, expanding its product offerings and control over the supply chain.
• 🚀 Samsung's diversification also included heavy industries like shipbuilding and construction, with projects like the world's tallest building, the Burj Khalifa.
• 🤝 The South Korean government's support through favorable loans and tax breaks played a significant role in Samsung's rapid expansion.
• 💔 Samsung's success story has a controversial side, with allegations of corruption, bribery, and close ties to the government that may have stifled competition.
• 🔥 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

00:00

🌟 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.

05:01

🏭 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.

10:03

📱 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.

15:04

🚀 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.

Keywords

💡Conglomerate

A conglomerate refers to a large corporation that operates in multiple industries, often unrelated to each other. In the video, Samsung is described as a conglomerate because it has expanded into various sectors such as electronics, construction, insurance, and even healthcare, showcasing its diversified business interests.

💡Diversification

Diversification in business terms means spreading investments across various types of financial instruments or areas to reduce risk. The script describes how Samsung's founder, Lee Byung-chul, diversified the company's business from its initial grocery sales to a wide range of industries, which helped Samsung to survive and thrive.

💡Korean War

The Korean War refers to the conflict between North and South Korea from 1950 to 1953, which had a significant impact on the region's political and economic landscape. The video mentions the war's devastating impact on Lee's business and South Korea, leading to a shortage of commodities and reliance on imports, which influenced Samsung's business decisions.

💡Semiconductor

A semiconductor is a material that has electrical conductivity between that of a conductor and an insulator. In the context of the video, Samsung's acquisition of a semiconductor company allowed them to control their supply chain for electronic components, which are crucial in the production of various electronic devices.

💡Supply Chain

Supply chain refers to the network of organizations, people, activities, information, and resources involved in manufacturing and delivering a product or service. The script explains how Samsung's acquisition of a semiconductor company enabled them to have full control over their supply chain, reducing their reliance on imported components.

💡Government Support

Government support typically involves financial assistance, tax breaks, or other incentives provided by the government to businesses to promote economic growth. The video details how Samsung received favorable loans and tax breaks from the South Korean government, which significantly contributed to its rapid expansion and success.

💡Chaebol

Chaebol is a Korean term for family-owned conglomerates that have built large business empires through close government ties. Samsung is described as one of the largest chaebols in South Korea, indicating its significant influence and wealth within the country.

💡Corporate Scandal

A corporate scandal refers to an event or situation that has a negative impact on a company's reputation due to illegal or unethical actions. The script mentions several instances of corporate scandals involving Samsung, such as bribery, tax evasion, and political slush funds, which have tainted the company's image.

💡Galaxy Note 7

The Galaxy Note 7 was a smartphone model by Samsung that became infamous for its battery issues, leading to fires and explosions. The video describes the product recall and the significant financial and reputational damage it caused to Samsung, highlighting the importance of product safety and quality control.

💡Product Recall

A product recall is when a company removes a product from the market due to safety concerns or defects. The script recounts the costly recall of the Galaxy Note 7, which cost Samsung over five billion dollars and damaged its reputation, demonstrating the severe consequences of product failures.

💡Market Competition

Market competition refers to the rivalry among companies within the same industry to gain market share. The video discusses Samsung's rivalry with Apple, particularly in the smartphone market, and how it influenced Samsung's aggressive product development strategies, which in turn led to the Galaxy Note 7 disaster.

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

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end and supporting this channel you are

a legend and i'll see you in the next

one

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