How Samsung dominates South Korea's economy.

Summary

Samsung's expansive empire dominates South Korea's economy, with its influence stretching from electronics to healthcare and beyond. The conglomerate contributes significantly to GDP and exports, with its electronics division alone accounting for nearly 70% of the country's top companies' operating profits. Samsung's integral role in Korean life and economy raises questions about its control over the nation's fate, with its collapse potentially leading to a severe economic crisis.

Takeaways

• 🌟 Samsung is a multinational conglomerate with a vast range of products and services, including electronics, real estate, construction, and even weapons.
• 🏢 It is deeply integrated into the South Korean economy, accounting for about a quarter of the country's GDP and a fifth of its total exports.
• 📈 Despite being a family-controlled business, Samsung's reach extends globally, with a significant impact on South Korea's economic growth and international reputation.
• 🏭 Samsung's electronics division is a major player in the global market, contributing to a large portion of the company's and South Korea's operating profit.
• 📺 The company started with trading and manufacturing of basic goods before expanding into electronics and other industries, reflecting its dynamic and adaptive nature.
• 🏙️ Samsung's influence in South Korea is so pervasive that it's possible to live a 'Samsung-only life,' from using its credit card to living in its constructed apartments.
• 💼 Samsung's workforce is massive, with 490,000 employees, surpassing the combined count of employees at Apple and Google.
• 🏥 The company is involved in healthcare, with Samsung Medical Center being the top hospital in South Korea and a major provider of private health insurance.
• 📱 Samsung dominates the smartphone market in South Korea, controlling around 60% of the market share and supplying key components to competitors like Apple.
• 🏛️ Samsung's contributions to South Korea's infrastructure, including universities, schools, and hospitals, highlight its role in supporting the government's services.
• 💡 The potential collapse of Samsung could lead to severe economic consequences for South Korea, affecting employment, the stock market, and government services.

Q & A

What is the scope of Samsung's business empire according to the script?

Samsung's business empire is vast, covering electronics and information technology, real estate, construction, shipbuilding, food, hotel management, entertainment, and even weapons.

How significant is Samsung to South Korea's economy?

Samsung is extremely significant to South Korea's economy, accounting for a quarter of the country's GDP and producing about a fifth of the total exports. In 2019, its revenue was about 17% of South Korea's GDP and it accounted for 28% of all exports.

What is the historical background of Samsung's establishment?

Samsung was founded in 1938 by Lee Byung-Chull as a small trading company in Taegu, Korea, dealing initially with groceries and later expanding into various industries.

How has Samsung diversified its business over the years?

Samsung has diversified by moving from trading to manufacturing noodles, wool, and sugar, then into financial services, electronics, and further into heavy industries like semiconductors, petrochemicals, and textiles.

What was Samsung's first product in the electronics industry?

Samsung's first product in the electronics industry was black-and-white televisions, which they started producing in 1969.

How did Samsung contribute to South Korea's economic transformation post-WWII?

Samsung contributed significantly by becoming a key symbol of South Korea's economic transformation, helping the country to rise from being one of the poorest to one of the richest in recent years.

What is the term for large family-controlled conglomerates in South Korea like Samsung?

The term for large family-controlled conglomerates in South Korea is 'chaebol'.

How did Samsung fare during the Asian financial crisis of 1997?

Unlike most chaebols that failed during the Asian financial crisis of 1997, Samsung continued to expand and was not stifled by the crisis.

What is Samsung's market share in the South Korean smartphone market?

Samsung controls around 60% of the smartphone market share in South Korea, consistently holding this share over the years.

What are some of the potential consequences if Samsung were to collapse?

If Samsung were to collapse, it would lead to a significant reduction in revenue and tax payments, massive layoffs, increased unemployment, and a potential national economic crisis more severe than that of 1997.

How does Samsung support the South Korean government and its people?

Samsung supports the government and its people by providing direct support through universities, schools, hospitals, and housing complexes, contributing significantly to exports, tax revenue, and employment.

Outlines

00:00

🌟 Samsung's Economic Dominance in South Korea

This paragraph delves into Samsung's expansive influence over South Korea's economy, highlighting its diverse business ventures beyond electronics, including real estate, construction, and even weapons. It underscores Samsung's significant contribution to the country's GDP and exports, with its revenue in 2019 equating to 17% of South Korea's GDP and accounting for 28% of all exports. The paragraph also discusses Samsung's growth trajectory, from its humble beginnings in 1938 to becoming a multinational conglomerate with 80 businesses and affiliates, and its role as the driving force behind South Korea's economic engine.

05:03

🚀 Samsung's Resilience and Contribution to South Korea's Prosperity

The second paragraph emphasizes Samsung's resilience through economic crises, such as the Asian financial crisis of 1997, and its role in South Korea's economic recovery and growth. It details Samsung's expansion over the years, its involvement in various sectors, and its impact on the Korean stock exchange and economy. The paragraph also discusses Samsung's contributions to the country's international recognition, its investments in R&D, and its influence on the daily lives of South Koreans, from healthcare to education and beyond. It concludes with the assertion that Samsung's success is intertwined with South Korea's prosperity, with its products and services deeply ingrained in the national fabric.

10:04

💥 The Potential Fallout of Samsung's Collapse on South Korea

This paragraph explores the hypothetical scenario of Samsung's collapse and its catastrophic effects on South Korea's economy and society. It outlines the potential increase in unemployment, the strain on public services due to reduced tax revenues, and the impact on the stock exchange and financial markets. The paragraph also considers the broader implications for the national pension service and the government's ability to meet its obligations to citizens. It paints a dire picture of a nation deeply reliant on Samsung, suggesting that the conglomerate's failure could trigger a crisis more severe than the one experienced in 1997.

Keywords

💡Samsung

Samsung is a multinational conglomerate corporation from South Korea, renowned for its diverse range of products and services. In the context of the video, Samsung is portrayed as a company that is deeply integrated into the daily lives and economy of South Korea, with its influence extending from electronics to real estate and even healthcare.

💡Chaebol

A chaebol is a term specific to South Korea, referring to large, family-controlled conglomerates that are a significant part of the country's economy. Samsung is a prime example of a chaebol, controlling a substantial portion of the Korean stock exchange and having a major impact on the country's economy and society.

💡Electronics

The electronics industry is a key part of Samsung's business, as highlighted in the script with products ranging from televisions to smartphones. The term 'electronics' in the video represents Samsung's role as a major player in the global technology market and its contribution to South Korea's economic growth.

💡GDP

GDP, or Gross Domestic Product, is a measure of a country's economic output. The script mentions that Samsung accounts for a significant percentage of South Korea's GDP, indicating the company's immense economic influence and its integral role in the nation's prosperity.

💡Exports

Exports refer to goods and services that are sold to other countries. The script emphasizes that Samsung's products make up a large portion of South Korea's total exports, showcasing the company's global reach and its importance to the country's trade balance.

💡Operating Profit

Operating profit is a measure of a company's profitability from its core business operations. The video script highlights the increase in Samsung Electronics' operating profit, illustrating the company's financial success and its impact on the overall profitability of South Korea's top companies.

💡Smartphones

Smartphones are a significant product category for Samsung and are mentioned in the script as a key area where Samsung leads the market, both domestically and internationally. The term 'smartphones' in the video underscores Samsung's dominance in the mobile technology sector and its contribution to the tech-driven economy of South Korea.

💡Investment

Investment is a term used in the script to describe Samsung's commitment to growth and development, such as its investment in R&D and new technologies. This highlights the company's proactive approach to innovation and its role in driving economic advancement in South Korea.

💡Market Share

Market share refers to the portion of the market a company controls in terms of sales or production. The script notes Samsung's significant market share in the smartphone industry in South Korea, demonstrating the company's strong presence and influence in the consumer electronics market.

💡Economic Crisis

The term 'economic crisis' is used in the script to refer to significant downturns in economic activity, such as the 1997 Asian financial crisis. The video discusses how Samsung not only survived but thrived during such times, underscoring its resilience and importance to South Korea's economic stability.

💡Influence

Influence, in the context of the video, refers to the power and control Samsung has over various aspects of South Korean life, including the economy, politics, and society. The script illustrates Samsung's pervasive impact, suggesting that it holds sway over the country's development and governance.

Highlights

Samsung's influence is so pervasive in South Korea that it's possible to live a 'Samsung-only life'.

Samsung is a multinational corporation with subsidiaries in nearly every industry, from electronics to shipbuilding and entertainment.

Samsung accounts for a quarter of Korean GDP and produces about a fifth of the country's total exports.

In 2019, Samsung Group's revenue was about 17% of South Korea's GDP, highlighting its economic dominance.

Samsung Electronics' operating profit increased significantly, contributing to South Korea's top 10 sales companies.

The company's history began in 1938 as a small trading company and has since grown into a global empire.

Samsung's first foray into electronics was with black-and-white televisions in 1969.

The company's expansion into various industries, including heavy chemicals and petrochemicals, indicates a promising growth path.

Samsung's investment in R&D and global market presence has been a key factor in its success.

Samsung's growth in the 1990s led it to become the world's largest producer of microchips.

Samsung Digital City is a testament to the company's vast business operations and contributions to South Korea.

As a chaebol, Samsung controls a significant portion of the Korean stock exchange and the country's economy.

Samsung's success as the world's largest smartphone manufacturer symbolizes South Korea's economic transformation.

Despite the Asian financial crisis of 1997, Samsung continued to expand, showcasing its resilience.

Samsung's dominance is so significant that South Korea is sometimes referred to as 'The Republic of Samsung'.

The company's involvement in various sectors, from healthcare to defense, underscores its integral role in South Korean life.

Samsung's contribution to South Korea's economy includes significant investments in R&D and job creation.

The potential collapse of Samsung could lead to severe economic consequences for South Korea, affecting unemployment and public services.

Transcripts

Samsung's modern-day empire is so vast that some South Koreans claim it's now possible

to live a Samsung-only life: you can use a Samsung credit card to buy a Samsung TV for

your Samsung-made apartment's living room, on which you'll watch the Samsung-owned pro

baseball team.

Although, Samsung is commonly known for its electronics and information technology division,

which manufactures televisions, refrigerators, laundry machines, computers, and, of course,

smartphones.

It is far more than just an ordinary electronics manufacturer.

It's a multinational corporation with subsidiaries in nearly every industry imaginable.

Real estate, construction, shipbuilding, food, hotel management, entertainment, and even

weapons are all on the table.

Samsung isn't even mostly owned by South Korea, yet it accounts for a quarter of Korean GDP

and produces roughly a fifth of the country's total exports.

According to Fair Trade Commission data and a Reuters calculation, Samsung Group affiliates'

revenue of 326.7 trillion won ($289.6 billion) in 2019 was worth about 17% of South Korea's

GDP.

It also accounts for 28% of all exports in the country

Samsung Electronics' operating profit to that of South Korea's top 10 sales companies increased

from 62.9 percent to 68.6 percent, in 2019.

Likewise, in 2020, Samsung Electronics increased its operating profit by 29.5% to 35.95 trillion

won.

In fact, by the end of 2020, the combined operating profit of the nine companies was

less than half of Samsung Electronics' operating profit.

As a result, Samsung is Korea's primary economic engine.

So…

Does that mean South Korea’s economy is being run by Samsung?

Does Samsung largely control South Korea’s economy as well as the government?

Before starting the long debate, let us take a step back and start our discussion with

the history of Samsung…

The journey of the giant Samsung began in 1938, when Lee Byung-Chull started his business

in Taegu, Korea.

It started off as a small trading company of 40 employees dealing with groceries while

it now has 490,000 employees, surpassing the total combined count of employees at Apple

and Google.

The company first started producing noodles, then moved on to wool and sugar, and finally

to financial services and electronics.

It is made up of 80 different businesses and affiliates, all of which are commercially

and legally separate but united under one roof.

Samsung first entered the electronics industry in 1969, with several divisions dedicated

to electronics.

Black-and-white televisions were their first products.

To better compete in the textile industry, the company expanded its textile-manufacturing

processes in the 1970s to cover the entire line of production—from raw materials to

finished goods.

The company then began exporting home electronics to other countries.

Samsung was already a major manufacturer in Korea at the time, having purchased a 50%

stake in Korea for Semiconductors.

During the same time period, the company began to invest in the heavy, chemical, and petrochemical

industries, indicating a promising growth path for the company.

In the 1970s and 1980s, Samsung experienced a massive growth spurt.

It began to invest more in development and research in the 1980s in order to establish

itself in global markets.

It began to build plants and factories in other countries and invest in foreign ventures.

Samsung then began developing advanced electronics in the early 1990s and grew to become the

world's largest producer of microchips.

After decades of development, it has now grown into the technological and electrical behemoth

that we know today.

Samsung now owns an entire city, known as Samsung Digital City, where there are a few

of the company’s businesses.

Now, if we talk about Samsung’s contribution to South Korea’s economy…

Samsung is a chaebol, or large, family-controlled conglomerate, that has dominated South Korea's

economy for decades.

Samsung controls 20% of the Korean stock exchange and 15%-17% of the country's economy.

To people outside Korea, Samsung is purely a technology company.

However, this family-controlled business operates in a wide spectrum of fields, from engineering

to chemicals.

It is a great pride of South Korea.

Samsung's domestic and international success, as the world's largest smartphone manufacturer,

has made it a key symbol of South Korea's economic transformation.

After WWII, the country went from being one of the poorest in the world to becoming one

of the richest in recent years.

After WWII, there was an economic crisis of 1997.

Although, the vast majority of chaebols failed during the Asian financial crisis of 1997,

according to a study, 14 of South Korea's 30 largest companies were wiped out during

that time period.

On the other hand, even the Asian financial crisis of 1997 failed to stifle Samsung's

expansion.

Samsung has been the shining knight, rescuing the country from post-war devastation and

then saving it 60 years later from the chaos of the financial crisis.

Samsung has helped Korea gain international recognition and become a prosperous economy.

It has been steadily growing for decades.

It now has 80 subsidiaries, which is more than double the number it had 25 years ago

and it has also grown in size relative to South Korea's economy, twice its share in

1987.

According to economists, small- and medium-business owners, and some politicians, Samsung no longer

just controls but also dominates the country, wielding power equal to that of the government.

In fact, the country is now referred to as "The Republic of Samsung" by some Koreans.

Samsung is involved in almost every aspect of South Korean life, including the construction

of roads and oil rigs, the operation of hotels and amusement parks, the sale of insurance,

and the operation of gas stations.

According to Samsung spokesman Kevin Cho, a powerful Samsung is good for the country

because it contributes significantly to Korea's exports, tax revenue, and employment.

“Samsung is a global player, not just a domestic one,” according to Cho.

Moreover, there are examples from various sectors in which Samsung is involved and hence

contributes to South Korea’s economy indicating that the country cannot run without it.…

So…

Let’s talk about them…

To begin with, it runs world-class medical research centers and hospitals across the

country, including Samsung Medical Center, the country's top hospital.

Although South Korea has universal health care, high out-of-pocket costs mean that 87

percent of Korean households also have private health insurance, with Samsung being the most

prominent provider.

It recently invested $83 million in a partnership with colleges to train semiconductor majors,

as well as $148 billion to expand its artificial intelligence, biotech, 5G communications,

and automotive electronics businesses, making it South Korea's largest source of R&D .

Then there's Samsung Biologics, the company's biopharmaceutical division.

In March 2020, the company was also ranked first in Korea for brand reputation among

pharmaceuticals.

It also secured a $362 million contract to manufacture coronavirus antibodies for a U.S.

company.

Samsung's product portfolio includes everything from clinics to funeral services, shipyards,

and military equipment, allowing you to live and die using only Samsung products.

Samsung has a significant lead over Apple in its home market.

Only one out of every ten smartphone users in South Korea owns an iPhone.

Samsung controls around 60% of share in the smartphone market and holds it consistently

throughout the years.

It also provides Apple Inc. with flash memory, mobile RAM (A4 chip), processors, and display

panels, among other things.

That being said, Samsung is just the king of them all.

So…

South Koreans can be born in a Samsung-owned hospital, learn to read and write with Samsung

tablets as they grow up, and then attend Sungkyunkwan University, which is affiliated with Samsung.

It doesn't stop there, though.

They could then live in an apartment complex built by Samsung and outfitted with the company's

appliances and electronics.

When South Koreans die, they may end up in a Samsung funeral home.

Another reason that Samsung has an incalculable impact on South Korea's economy is because

it employs tens of thousands of South Koreans, produces goods across the board, and even

owns many of the homes and stores where these people live and work.

Because of its size and rapid growth, the government looks to Samsung to solve its unemployment

problems.

Samsung Electronics promised to create 40,000 new jobs in the next three years in response

to a government request in 2018.

Now, let’s talk about Samsung’s influence on South Korea’s government…

Samsung provides direct support to its government in the form of universities, schools, hospitals,

and housing complexes, among other things.

The government receives much benefit from Samsung.

The South Korean government cannot ignore Samsung's political, economic, social, and

scientific contributions to helping them fulfil their responsibilities to their people.

It protects, provides, and invests in talent.

On the political stage, Samsung is a strong advocate of the South Korean government.

This can be evidenced by the invitation of Samsung electronics CEO Lee Jae-Yong to attend

and accompany president Moon Jae-in at the third summit with North Korea in 2018.

Moreover, Samsung gives the government immense negotiating power due to its economic importance

worldwide.

Now you must be thinking…

What if Samsung collapses?

How will South Korea suffer?

As a result of Samsung's demise, the revenue stream and tax payments of Samsung's contractors

would be reduced.

Its entire workforce would be laid off, resulting in a 7.1 percent increase in unemployment,

excluding contractors who rely solely on Samsung, whose unemployment rate is expected to double.

As a result, unless the government increases its budget for it while neglecting other services,

schools, hospitals, and other services will become more expensive and unaffordable for

a large portion of the population.

The domestic stock exchange and financial market would lose foreign investors.

The national pension service of the country is expected to lose $16.7 billion in investment.

As a result of the revenue shortfall, the government would be unable to fulfil its basic

responsibilities to its citizens.

If Samsung fails, South Korea faces a more serious economic crisis than it did in 1997.

All in all, Samsung's failure would have far-reaching consequences for the South Korean government

and economy.

So…

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