South Korea has a saying: "There are three things that are unavoidable in life: taxes, death, and Samsung." This speaks to the pervasive presence and influence of the Samsung Group in Korean society. To truly understand modern Korea, one must understand Samsung. This is the story of how Samsung grew to such a position of power, beginning with its founder, Lee Byung-chul.
Lee Byung-chul: The Founding Father
Born in 1910, Lee Byung-chul, often hailed as the "god of Korean entrepreneurship," came of age during a tumultuous period in Korean history. The Japanese annexation of Korea, beginning in 1910 and lasting until Japan's defeat in World War II in 1945, cast a long shadow over his formative years. This era of instability and upheaval, however, provided fertile ground for ambitious individuals like Lee Byung-chul to make their mark.
Lee Byung-chul's entrepreneurial journey was one of dizzying highs and crushing lows. His first venture, a rice mill established in 1930, quickly became the largest in his city. He shrewdly acquired a Japanese transportation company and, leveraging his assets, invested heavily in real estate, becoming a major landowner. However, this period of rapid growth came to an abrupt end when Japan, facing financial constraints due to its war in China, ordered the closure of all banks in Korea. Lee Byung-chul was driven to bankruptcy.
Undeterred, he pivoted to trading, establishing Samsung Trading Company, exporting Korean goods to China. He later expanded into brewing, acquiring a struggling Japanese brewery and transforming it into a leading brand. This success, too, was short-lived. The escalation of World War II in 1941 led to strict resource controls, forcing Lee Byung-chul to shut down his brewing operation.
By the age of 31, he had already experienced two major business failures.
The Birth of Samsung and the Korean War
Japan's surrender in 1945 and the subsequent withdrawal from Korea marked a turning point for Lee Byung-chul. The election of Syngman Rhee as the first president of South Korea in 1948 presented a unique opportunity. Rhee, an old friend of Lee Byung-chul's father, provided crucial support to Korean entrepreneurs, including Lee Byung-chul.
In 1948, Lee Byung-chul re-established Samsung, initially focusing on trading. He capitalized on his relationship with the Rhee government, acquiring valuable Japanese assets that were being privatized at bargain prices. This move catapulted Samsung into the ranks of Korea's top ten businesses within a year.
However, the outbreak of the Korean War in June 1950 once again devastated the Korean economy, leading to Samsung's third bankruptcy.
Despite these setbacks, Lee Byung-chul, now in his 40s, refused to give up. Leveraging his political connections and his unwavering entrepreneurial spirit, he re-established Samsung in December 1950. This time, it would be different. This was the genesis of the Samsung Group we know today.
During the tumultuous war years and its aftermath, Samsung flourished. The company diversified, establishing Korea's largest sugar refinery and textile factory. It acquired a vast array of businesses, entered the banking sector, and became a sprawling conglomerate, dominating production, logistics, exports, and finance. By the late 1950s, Lee Byung-chul had become one of Korea's wealthiest individuals.
Navigating Political Upheaval: From Rhee to Park
Lee Byung-chul's close ties to the Rhee government proved to be a double-edged sword. The downfall of the Rhee regime in 1960 and the subsequent military coup led by Park Chung-hee in 1961 ushered in a new era of uncertainty. Sensing trouble, Lee Byung-chul fled to Japan.
Park Chung-hee, seeking to consolidate power, targeted the established business elite, including Samsung. Lee Byung-chul, accused of corruption, became a fugitive. In a desperate attempt to salvage his empire, he wrote to Park, arguing for the importance of a strong private sector in rebuilding the war-torn nation.
To his surprise, Park was receptive to his arguments. Recognizing the potential of "chaebol" (large, family-controlled conglomerates) in driving economic growth, Park struck a deal with the business leaders: their economic power would be tolerated, even encouraged, in exchange for their unwavering loyalty and support. Thus began Korea's "chaebol era," a period of rapid economic growth fueled by close collaboration between the government and a handful of powerful conglomerates, including Samsung.
The Expansion of Samsung and the Semiconductor Gamble
Under Park's rule, Samsung thrived. The company benefited from preferential government policies and loans, expanding into new sectors such as insurance, department stores, real estate, and paper manufacturing. In 1978, Samsung Electronics emerged as a global leader in consumer electronics, with its televisions achieving top sales worldwide.
In 1974, Lee Kun-hee, Lee Byung-chul's third son and chosen successor, made a pivotal decision. Against the advice of many, including his father, he invested heavily in the nascent semiconductor industry, acquiring a struggling Korean semiconductor company. This move would prove to be a stroke of genius. As the personal computer revolution took off, demand for semiconductors skyrocketed, positioning Samsung at the forefront of a global technological transformation.
The Succession Crisis: A Family Divided
As Lee Byung-chul approached his 60s, the question of succession loomed large. The competition to inherit Samsung, a sprawling empire, became a bitter family feud. Of his ten children, his three eldest sons – Lee Maeng-hee, Lee Chang-hee, and Lee Kun-hee – were considered the most likely heirs.
The eldest, Lee Maeng-hee, was initially appointed as successor. However, his attempts to reform the company, coupled with his lack of experience and decisiveness, led to internal strife and declining profits. Lee Byung-chul was forced to resume control.
The second son, Lee Chang-hee, saw an opportunity to prove his worth during a scandal involving Samsung's alleged smuggling of goods. He took the fall, serving a brief prison sentence. However, his actions ultimately backfired. He later attempted to undermine his father by reporting his alleged illegal activities to the government, further damaging his standing within the family.
The youngest of the three, Lee Kun-hee, had long been groomed for leadership by his father. He was a keen observer, learning the intricacies of the business and cultivating relationships with key figures. The failures of his brothers paved the way for his eventual ascension to power.
The Reign of Lee Kun-hee: Quality, Control, and Controversy
Lee Kun-hee inherited a Samsung that was already a dominant force in the Korean economy. However, he had even greater ambitions. He pushed the company to shed its image as a manufacturer of cheap, mass-produced goods, demanding uncompromising quality and technological innovation. This relentless pursuit of excellence, coupled with aggressive marketing and strategic acquisitions, transformed Samsung into a global brand synonymous with cutting-edge technology.
Central to Lee Kun-hee's strategy was his ability to navigate the complex relationship between Samsung and the Korean government. While the chaebol had thrived under Park Chung-hee's authoritarian rule, the transition to democracy in the late 1980s presented new challenges and opportunities. Lee Kun-hee, recognizing the importance of political influence, cultivated close ties with successive administrations, allegedly using his wealth and influence to secure favorable policies and contracts.
The lines between Samsung's corporate interests and Korean politics became increasingly blurred. Lee Kun-hee was twice convicted of bribery and tax evasion, only to be pardoned by the government. The "Samsung Republic" became a common refrain, reflecting the company's outsized influence on Korean society.
The Lee Jae-yong Era: Securing the Dynasty
In 2014, Lee Kun-hee suffered a debilitating heart attack, leaving him incapacitated. The question of succession once again gripped Samsung, but this time, the stakes were even higher. The company's importance to the Korean economy meant that a smooth transition was paramount.
Lee Jae-yong, Lee Kun-hee's only son, had long been groomed to take the reins. However, the family's complex web of cross-holdings and Korea's steep inheritance taxes presented significant hurdles. To consolidate control and minimize tax liabilities, Lee Jae-yong orchestrated a controversial merger between two Samsung subsidiaries, Cheil Industries and Samsung C&T. This move, which was widely seen as unfavorable to Samsung C&T shareholders, sparked accusations of bribery and corruption, ultimately ensnaring Lee Jae-yong, Samsung executives, and even then-President Park Geun-hye in a scandal that rocked the nation.
Despite being convicted of bribery and sentenced to prison, Lee Jae-yong was released in 2022 after serving less than half of his sentence. He has since returned to the helm of Samsung, vowing to usher in a new era of transparency and responsible management. However, the legacy of Samsung's rise – a story interwoven with ambition, political maneuvering, and allegations of wrongdoing – continues to cast a long shadow over the company.
The story of Samsung is a microcosm of South Korea's own tumultuous journey: a testament to its resilience, its entrepreneurial spirit, and its ongoing struggle to balance economic might with ethical responsibility. As Samsung enters a new chapter, the world watches to see how this Korean giant will navigate the challenges of the 21st century.