REPUBLIC OF SAMSUNG
David McNeill and Donald Kirk wrote in The Independent: Samsung “has a turnover almost twice that of its closest rival, LG. The company’s clout is apparent in the drive from the airport west of Seoul into the capital, where a dense grey lattice of concrete and glass stretches across the Han river. Samsung’s apartments and buildings dot the landscape; Samsung Town dominates the business district. The company runs the Samsung Everland Theme Park, one of the world’s biggest, the Samsung Museum of Art and many other cultural attractions. Millions of citizens own Samsung’s smartphones and electronic products. So important is Samsung to South Korea’s economy that it has literally become too big to fail. Its subsidiaries build a large share of the country’s infrastructure, from bridges to apartment blocks. The company accounts for 13 per cent of the country’s entire exports and a fifth of its GDP, according to analysts. [Source: David McNeill, Donald Kirk, The Independent, February 26, 2013]
In 2012, Chico Harlan wrote in the Washington Post: “So sprawling is Samsung’s modern-day empire that some South Koreans say it has become possible to live a Samsung-only life: You can use a Samsung credit card to buy a Samsung TV for the living room of your Samsung-made apartment on which you’ll watch the Samsung-owned pro baseball team. Some Koreans call the country “The Republic of Samsung.” [Source: Chico Harlan, Washington Post, December 11, 2012]
“Famous globally for its electronics, Samsung would be one of the largest conglomerates in almost any country. But within its tiny home country, the size of Virginia, it acts more as a do-everything monolith, building roads and oil rigs, operating hotels and amusement parks, selling insurance, making not only the world’s best-selling smartphone, the Galaxy, but also selling key components to Apple for the iPhone. — even as the two battle in a series of lawsuits. But in its domestic market, Samsung is far ahead of Apple. Only one in 10 South Korean smartphone users has an iPhone.
“But the conglomerate thrives now in part because it makes good products — an important point for South Koreans, who are deeply competitive and see in Samsung some of the traits they want for themselves: ambition, speed and the ability to adapt and stay on top. A powerful Samsung is healthy for the country, corporate spokesman Kevin Cho said, because it makes “major contributions to Korea’s exports, tax revenue and employment.” Cho also emphasized that Samsung is a global player, not just a domestic one. In 2011, 84 ?percent of its electronics revenue was generated outside of Korea. Samsung is a “survivor” of competition, said Lee Cheol-haeng, of the Federation of Korean Industries, which lobbies for large businesses. “Many Koreans right now have dual minds about chaebols,” Lee added. “They say, ‘I hate chaebols, but I want my son to work for one.’?”
Living in the Republic of Samsung
In 2005, Don Lee wrote in the Los Angeles Times: “Cho Sung Yoon and his wife live on the 27th floor of a Samsung apartment complex here. They cook their food on a Samsung electric range. They call each other on Samsung cellphones and check their e-mail on a Samsung home computer. Recently, they used their Samsung credit card to get a 30 percent discount at a water park at Samsung Everland, South Korea's largest amusement park. If the couple had a serious mishap there, they would have been covered. Their insurance company? Who else: Samsung. "There should be more companies like it," says 44-year-old Cho, who works at a marketing business. [Source: Don Lee, Los Angeles Times, September 25, 2005]
“In many parts of Seoul, the nation's capital, it's hard to pass a street without feeling Samsung's presence. There are 227 apartment complexes in Seoul and other cities with "Samsung" emblazoned on them. Signs bearing Samsung's blue-and-white logo jut out from countless storefronts selling Samsung digital products, stocks and security services. Samsung employs 135,000 people in South Korea, one of the largest workforces in the nation.
“Thousands of people are treated at Samsung's four hospitals. Many more stay at its hotels and pay for tickets to see Samsung's pro baseball team, the Lions, or movies at dozens of theaters affiliated with Samsung. One of every two South Koreans carries a Samsung mobile phone. Many say Samsung products do well in its home market because of edgy designs, strong marketing and service.”
Resentment Towards Republic of Samsung
Don Lee wrote in the Los Angeles Times: “Lee Nam Jong, who sells insurance for a living, says that when she reported a problem with a Samsung phone, company technicians came three times to check on it. But the 42-year-old doesn't care for the way Samsung does business. "Our prices and terms are better," she says of her company, Shin Han Life Insurance. Still, she says, Shin Han can't compete because of Samsung's size and resources. But Samsung is so pervasive and its influence so immense in South Korean society that many here say it has turned the nation into a giant company town. They call it the Republic of Samsung. "They're too big," Cho's wife complains. [Source: Don Lee, Los Angeles Times, September 25, 2005]
“Like America's Rockefellers, Morgans and Vanderbilts of a century ago, the family that controls Samsung is contending with a populace increasingly wary of the corporation's vast wealth and power. Many South Koreans are troubled by what they view as Samsung's corporate arrogance and tentacle-like reach in society.
“With the biggest life insurance, brokerage and credit card operations in the nation, Samsung has personal data on millions of South Koreans, which makes some citizens nervous. Small businesses complain that, like Wal-Mart, Samsung demands too much from contractors who make goods to sell under the firm's name.
“Samsung Group's reclusive chairman, 58-year-old Lee Kun Hee, South Korea's richest man, with an estimated fortune of $4 billion, has come under fire, accused of running the corporation like a feudal lord. Civic groups comprising scores of lawyers, professors and accountants have mobilized and filed lawsuits to push Samsung to operate more transparently and give minority shareholders a greater say in the company's affairs. Samsung Electronics' foreign shareholders express similar frustration. "The family is not the majority ownership but has disproportionate sway over what the company does," says Devan Kaloo, head of global emerging markets for London-based Aberdeen Asset Management, which owns $770 million in Samsung stock.”
At this time, “Samsung Chairman Lee was becoming concerned about anti-Samsung sentiments. In May 2005, company insiders say, Lee called Samsung affiliate heads to a meeting to talk about how to create a better image and contain any backlash against the company. A year earlier, Samsung's leaders had visited Sweden to study the Wallenbergs, the super-rich family that controls a substantial part of that nation's economy. Lee hasn't given an interview in 10 years, but in his writings he has stressed the importance of social responsibility, comparing corporate arrogance to the ills that destroyed the Roman Empire. "The minute one thinks a business can be run by himself or herself, negligence and corruption sprout," he wrote. "And then, the firm will no longer have a tomorrow."
Samsung’s Economic Clout in South Korea
Chico Harlan wrote in the Washington Post: “Samsung is South Korea’s greatest economic success, and, more recently, is also the subject of major controversy. Economists, owners of small- and medium-size businesses, and some politicians say Samsung no longer merely powers the country, but in fact overpowers it, wielding influence that nearly matches that of the government. [Source: Chico Harlan, Washington Post, December 11, 2012]
“Critics say Samsung elbows into new industries, knocking out smaller businesses, limiting choices for Korean consumers and sometimes colluding with fellow giants to fix prices while bullying those who investigate. They also see in Samsung the picture of closed-door wealth, a family affair in which chairman Lee Kun-hee is passing power to his son. “You can even say the Samsung chairman is more powerful than the South Korean president,” said Woo Suk-hoon, host of a popular economics podcast. “Korean people have come to think of Samsung as invincible and above the law.”
“That sentiment has intensified in recent years, a period during which Samsung has obstructed price-fixing investigations — drawing only minor fines — and seen its chairman indicted for financial crimes, only to receive a presidential pardon “in the national interest,” as a government spokesman put it.
Samsung and the South Korean Government
Chico Harlan wrote in the Washington Post: ]“South Korea ranks poorly among democratized countries in corruption rankings, and the traditionally cozy ties between government and the biggest companies were widely seen as the enabler of the country’s economic rise. “Samsung became a budding power after the alliance was forged between its founder, Lee Byung-Chul, and the military dictator, Park, who controlled the country’s banks and determined who got loans. [Source: Chico Harlan, Washington Post, December 11, 2012]
Don Lee wrote in the Los Angeles Times: Samsung has “a shrewdly built political machine. Analysts say Samsung systematically recruited influential people, lobbied judges and prosecutors, and handed out money to politicians.” In August 2005, “a civic activist group disclosed the names of scores of prominent South Koreans formerly or currently on Samsung Group's payroll, including past prime ministers, a former finance minister and senior officials in key tax, audit and other financial regulatory agencies.“Politicians and professors alike say that has helped Samsung wield enormous sway over the country's leading institutions, including courts, universities and even the Blue House, the official residence of the South Korean president. [Source: Don Lee, Los Angeles Times, September 25, 2005]
In May, President Roh Moo-hyun pardoned Samsung Vice Chairman Lee Hak Soo, after he was convicted on charges that he made $38 million in illegal political contributions in the 2002 presidential election campaign. "The law stops at the gate of Samsung headquarters," says Choi Jang Jip, a professor of politics and international relations at Korea University in Seoul. Sun Mi Ra, a spokeswoman for the president, denies that Samsung or any other company has undue influence over the Blue House. Sun says Roh's decision to pardon Lee, as well as other chaebol executives in the last year, was made because their actions were part of a "bygone era" and for the sake of supporting the national economy. "It's to facilitate business activities," Sun says. Activist groups, such as the People's Solidarity for Participatory Democracy, don't buy that. They also contend that judges and financial regulators have been powerless to stop Samsung from skirting South Korea's new corporate governance rules .
Samsung’s Power: a Political Issue
Chico Harlan wrote in the Washington Post: “ Debate over how to curb the size and power of Samsung and other family-run conglomerates has turned into the key issue in South Korea’s December 2012 presidential election, with polls showing that about three in four voters say they feel negatively about the country’s few behemoth businesses, and candidates sparring over how far to go to constrain them. Samsung draws the greatest scrutiny because it is by far the largest chaebol and because it is experiencing runaway prosperity as the rest of the economy slows down. The conglomerate contributes roughly a fifth of South Korea’s gross domestic product. [Source: Chico Harlan, Washington Post, December 11, 2012]
“South Korea’s leading presidential candidates say the country has been far too lenient in how it treats its richest men. Chaebol executives who commit crimes should be punished harshly, they all say, with no chance for such redemption The leading candidates say South Korea should prevent conglomerates, Samsung included, from weaving their various companies together in what’s known here as “cross-shareholding,” a controversial ownership structure in which a family concentrates its shares in a few core companies, then passes investment to other affiliates within the group. The arrangement allows families to control a broad range of businesses, even those in which they hold few, if any, shares.
“Though there is broad agreement about some reforms, the level of concern about chaebol differs across party lines. The position of conservative candidate Park Geun-hye is that the conglomerates are merely unruly — a notable view in itself, given that Park belongs to Lee Myung-bak’s pro-business ruling party, and that her father — dictator Park Chung-hee — built the chaebol system after taking power in a military coup in 1961. Park said recently that chaebols often steal technology from smaller innovators and force unfair pricing on suppliers. “In the economic area, we have emphasized the concept of efficiency, and in some sense we haven’t paid enough attention to the concept of fairness,” she said.
“But the opinion on the far left is that chaebols, particularly Samsung, hold a dangerous level of influence. That viewpoint caught traction after a former Samsung counsel, in 2007, accused the conglomerate of systematically distributing money from a slush fund to influential figures. In the ensuing investigation, a special investigator found no evidence of bribery but did uncover the financial crimes for which Lee, the chairman, was later pardoned. “Samsung has the government in its hands,” Lee Jung-hee, a liberal presidential candidate with virtually no chance of winning, said in a nationally televised debate last week. “Samsung manages the legal world, the press, the academics and bureaucracy.”
Samsung and Dogs
Crufts, held annually in the United Kingdom, is the world’s biggest dog show. According to K9 Magazine: If you've ever been to Crufts you'll have no doubt witnessed for yourself the giant commercial installations of the big pet industry brands but have you ever wondered why Samsung, a consumer electronics company, has such a noticeable presence at the event? [Source: K9 Magazine, June 23, 2015]
John Kim, Senior Vice President, Samsung Office of International Relations, explains: “Samsung’s products and services are designed to improve the quality of people’s lives. Thanks to our visionary Chairman, who is a passionate dog lover, we believe that animals, but especially dogs, can significantly enhance the quality of our daily lives and positively enhance our emotional makeup. Events like Crufts is a chance for us to share this belief with UK dog lovers and show them just what Samsung is doing in Korea to bring people and dogs closer together.
“Lee Kun-Hee is a passionate animal lover. With a childhood surrounded by dogs and realising their tremendously positive impact on his formative years, Mr Lee became steadfast in his decision to show his fellow Koreans the value of dogs and their importance on our emotional makeup, just as they had impacted on him. He wanted to establish programmes in Korea to help bridge the gap between people and animals – especially dogs – and educate the public by showing the long-term rewards of responsible pet ownership and the contribution of dogs on all parts of society. From one man’s passion, a new Samsung division — the Samsung Office of International Relations — was established.
“Over the years, staff from this new unit were regularly dispatched to the UK, which Samsung regarded as an epicentre for animal welfare, to learn about specific animal welfare initiatives from top UK organisations and individuals. These organizations included The Animal Health Trust, Guide Dogs for the Blind Association, PRODogs, the RSPCA and Dogs for the Disabled, Search and Rescue Dog Association (SARDA) English Lake District Branch and the West Midlands Police Dog Centre. As a result of these partnerships, Samsung was then able to establish its own similar programmes in Korea.
“Thanks to its investment in research and foreign exchange partnerships with charities and organizations in order to get things right from the start, Samsung has been able to set up the following initiatives in Korea: Samsung Guide Dog School for the Blind- Animal Assisted Therapy (AAT) programme- Pet Ownership Programme- Search and Rescue Dog Centre- Assistance Dog Centre- Riding for the Disabled- Samsung Quarantine Detector Dog Centre
“As the UK has had such a heavyweight impact on the establishment of virtually all seven programmes, events like Crufts provide Samsung with a platform from where the company can update its British friends about the progress and the response to its work. Critically, the company’s special commitment to animal welfare is founded on a philosophy which is now an integral part of the company’s culture and is being warmly embraced by the Korean public.
“As John Kim sums up: “People do question why we are involved with animal welfare and what originated from one man’s personal experience and passion, is now a shared feeling amongst Samsung staff in Korea and helping to change attitudes amongst the Korean public. We are proud that our programmes are a catalyst for change and are helping to nurture an animal loving culture. So much has happened in the past 10-15 years to the animal welfare landscape in Korea and whilst there is always more to be done, as a major player in Korea we are prepared to do our part. Whilst many companies support worthy causes with donations, our methodology is to lead by example, and so we have gone a step further than most by setting up a Samsung unit dedicated to our seven animal welfare programmes, which also includes kennel facilities and training centres.
“Crufts 2005 also saw the first UK appearance of the highly revered Jindo dog, the indigenous Korean breed which is protected by the Korean government and which carries the title of Korean ‘National Treasure’ (number 53), the highest honour given to precious artefacts, animals or people in Korea, on Samsung’s stand. Visitors were able to meet the Jindo first hand, learn about the breed, its heritage and characteristics, as well as Samsung’s efforts to protect and build awareness of the breed both in Korea and in the UK.”
Samsung Sues British Writer For Mocking the Company in a Satirical Piece
In 2010, Samsung filed a libel suit against a British columnist for defamation after he satirized the company in his column in a South Korean newspaper. John M. Glionna wrote in the Los Angeles Times: “In his Christmas Day 2009 column for the Korea Times, Michael Breen decided to lampoon such national newsmakers as President Lee Myung-bak and the pop idol Rain. Headlined "What People Got for Christmas," the English-language column also poked fun at global technology giant Samsung Electronics, referring to past bribery scandals as well as perceptions that its leaders are arrogant. [Source: John M. Glionna, Los Angeles Times, May 10, 2010]
“The piece was meant as a satirical spoof, the columnist says, but Samsung wasn't laughing. Breen's column ran as local media reported that President Lee would soon pardon Samsung Chairman Lee Kun-hee on a 2008 conviction for tax evasion. Chairman Lee, 68, had already received a federal pardon in the 1990s on a conviction for bribing two former presidents while he was with the firm. On Dec. 29, the day of Lee's pardon, Samsung sued the freelance columnist, the newspaper and its top editor for $1 million, claiming damage to its reputation and potential earnings. After the Korea Times ran clarifications, the newspaper and its editor were dropped from the suit.
“But Samsung continues to pursue Breen personally for libel, both civilly and on criminal charges that he intentionally libeled the company. If convicted, he faces a hefty fine and even jail time. "The reason I'm being sued is that the beast roared," said Breen, 57, a British native and longtime social commentator and South Korean resident who wrote a 1998 book on South Korea's modern history. In its suit, Samsung said the column used a "mocking tone" to add "baseless, malicious and offensive false information to criticize" the firm. After Samsung complained, the paper ran two clarifications, one of which Breen says he was told by editors was written by Samsung.
“Legal experts here say the case underscores the considerable power wielded in South Korean society by such mammoth corporate conglomerates, known as chaebols, which are dominated by top officials, often related, who are treated here as near-royalty. In a nation where reporters are often discouraged from highlighting chaebol transgressions, some say Samsung's pursuit of Breen is intended as a warning. The message: Even when joking, don't mess with the chaebols. "In South Korea, it's considered taboo to criticize the chaebols," said Kim Ky-won, professor of economics at Korea National Open University. "They hold very close to absolute power."
“Most critical stories run in smaller media less dependent on ads from big companies. Major media reports are mostly limited to breaking news of prosecutions of chaebol leaders but seldom probe deeper, critics say. "Samsung has financial power over the press. They're their own sanctuary where no one can intervene or criticize them," said Kim Keon-ho, an official at the Citizens' Coalition for Economic Justice.
“Breen, who now owns a Seoul public relations firm and wrote "The Koreans: Who They Are, What They Want, Where Their Future Lies," also pens occasional newspaper columns in English and Korean. The Christmas Day column imagined what gifts public figures in the news might send. "I wanted to give people a laugh at Christmas," Breen said. "One of the prices of being a public figure is to be the occasional butt of a joke."
One item read that Samsung had sent to all employees photographs of the son of the firm's chairman with instructions for hanging the photo next to one of his father — an allusion to North Korea's Kim Il Sung and Kim Jong Il. Breen also wrote that Samsung, "the rock upon which the Korean economy rests, sent traditional year-end cards offering best wishes for 2010 to the country's politicians, prosecutors and journalists along with [$50,000] gift certificates."
Samsung said the comments go beyond the definition of satire allowed under South Korean law. The lawsuit refers to Breen as a Korean "specialist" with wide-ranging influence. Since 80 percent of its revenues are from overseas, the firm is sensitive to any "minor accident or mistake" that could adversely affect its international reputation, the suit said. "Even though anyone who read or heard of this article knows that this is not true, they can mention this as a joke, which can be spread easily, so its damage is very serious," the lawsuit read. In South Korea, experts say, "Saturday Night Live"-style satire is not a common form of humor. Additionally, both South Korean civil and criminal codes regarding defamation are stricter than in many other countries, including the U.S., said Brendon Carr, an American attorney who practices in Seoul.
Image Sources: Wikimedia Commons.
Text Sources: South Korean government websites, Korea Tourism Organization, Cultural Heritage Administration, Republic of Korea, UNESCO, Wikipedia, Library of Congress, CIA World Factbook, World Bank, Lonely Planet guides, New York Times, Washington Post, Los Angeles Times, National Geographic, Smithsonian magazine, The New Yorker, “Culture and Customs of Korea” by Donald N. Clark, Chunghee Sarah Soh in “Countries and Their Cultures”, “Columbia Encyclopedia”, Korea Times, Korea Herald, The Hankyoreh, JoongAng Daily, Radio Free Asia, Bloomberg, Reuters, Associated Press, BBC, AFP, The Atlantic, The Guardian, Yomiuri Shimbun and various books and other publications.
Updated in July 2021