Lee Byung-chull (1910-1987)
Late founder of Samsung Group |
Lieutenant of Late Lee Byung-chull Recalls Time With One of Korea’s Industrial Founding Fathers
By Kim Tong-hyung
Staff Reporter
Samsung Group, one of the largest of Asia's industrial heavyweights and undisputed kingpin of Korea Inc., belongs among the planet's true monster corporations.
Not bad for a company that started out as a tiny exporter of dried fish and fruit. Samsung has indeed come a long way since its founder, Lee Byung-chull, then a 28-year-old, opened its first office in 1938 on the edge of a marketplace in Daegu.
By the time of Lee's death in 1987, Samsung had grown into one of the world's largest corporations with 37 subsidiaries, 75,000-plus employees and annual sales of 14 trillion won.
Now, the group has 64 subsidiaries that employ nearly 300,000 workers and combine for revenue of around 200 trillion won (about $172.3 billion), roughly one-fifth of the country's gross domestic product (GDP).
As Samsung increasingly strengthens its position among the greatest of global companies, it also seems to be braided that much further into the fabric of its home country.
Koreans have been talking about a ``Samsung Republic'' for many years now, but the words are starting to lose some of their sarcasm ― Samsung now provides the hospitals where people are born, the apartments they live in, the televisions they watch, the mobile phones they talk on, the mega discount stores and malls they go to shop, and the credit cards they use there, and then the funeral halls when they die.
It could be claimed that Samsung is achieving a level of success Lee would never have dared to imagine. But according to one Samsung veteran, the hard-to-please Lee would have no trouble motivating himself if he were calling the shots right now.
``Lee always stressed that the best time for initiating changes is the moment the company reaches the top in any field,'' said Yang In-mo, senior executive adviser and former vice chairman of Samsung Engineering, in a recent interview with The Korea Times.
``Lee laid the foundation for Samsung's global growth and former chairman Lee Kun-hee took the process further and equipped the company with global competitiveness. However, this also brings that much more expectations and pressure, and as Lee Kun-hee said recently, a moment of complacency could just be enough for Samsung to slide into becoming a `mom and pop store,''' he said.
Yang, 70, who doubles as the honorary consul general of Croatia to Korea, is certainly a credible source when discussing the business philosophies of the late Lee.
Joining Samsung in the 1960s, Yang went on to establish himself as a key lieutenant for both Lee and his son, Lee Kun-hee, who later succeeded as group chairman. Yang held several executive positions at Samsung's trade and construction divisions before taking the management helm at Samsung Engineering from 1997 to 2003.
He also served as the elder Lee's top secretary from 1968 to 1973, a period during which Lee made several important decisions that altered the course of Korean business history forever, including the incorporating of Samsung Electronics, now the crown jewel of Samsung's corporate empire.
Samsung is now preparing to celebrate the 100th anniversary of Lee's birth in Uiryeong, South Gyeongsang Province in 1910, preparing a variety of programs including seminars and cultural events.
`Light, Thin, Short and Small'
The most distinctive aspect of Lee's character, according to Yang, was that he seemed always aware of his legacy as one of the founding fathers of the Korean industry. Profit, of course, was important, but Lee was motivated by much more than just plain, corporate greed, Yang said.
``Korea's economic miracle had been based on cheap labor, but Lee always seem to think that it was up to Samsung to lead the transition into a more knowledge and capital-intensive economy and allow the country to compete in sophisticated technologies,'' Yang said.
``Lee was always studying the development trends of more advanced economies, especially Japan, and this had him convinced in the potential for growth in information-related technologies and electronics.''
Unlike another famous contemporary, Chung Ju-yung, who chose to base the fortune of the Hyundai Group on heavy industries, construction, cars and ships, Lee focused on all things ``light, thin, short and small,'' which led to leadership in products such as sugar, textile, consumer electronics, and eventually, semiconductors.
The turning point, of course, was the forming of Samsung Electronics in 1969. After trying but failing to secure partnerships with leading Western companies Zenith and Ericsson, Lee started his electronics division as a joint venture with Japan's Sanyo.
Samsung Electronics went solo in 1972 after the partnership with Sanyo was discontinued, and emerged as the world's leading producer of black-and-white televisions by 1978, producing about 2 million sets that year. Aside from its manufacturing strength, the company also began reporting advancement in technology, becoming one of the first companies outside of Europe and Japan to develop its own videotape recorder (VTR).
Lee also made a critical decision in 1979, when he decided that Samsung Electronics would acquire a small, state-run maker of electronic telephone exchanges called KTC.
This allowed Samsung Electronics to enter the area of telecommunications devices and equipment, and laid the foundation for the company's world-beating mobile-phone business.
``This was the time when Lee began stressing that ability in research and development (R&D) would determine the future of Samsung,'' said Yang.
``It was not that Samsung was the first Korean maker of black-and-white televisions, as Anam, thanks to a partnership with Matsushita (now Panasonic), was the industry leader, and it was also assembling semiconductors for another Japanese company, NEC. The focus for us, however, was to achieve a level of independence in technology and reduce our reliance on foreign components by spending more on R&D ― we began with copycat products but never intended to keep doing that.''
Not that everything came smooth for Lee in building up Samsung's corporate empire. He first had to survive the Korean War (1950-1953), which decimated all of his businesses aside from a small Daegu brewery.
After reviving Samsung's fortune with successful forays into trade, sugar and textiles, the military regime of Park Chung-hee in the 1960s proved to be another challenge, as it forced Lee and other leading businessmen to donate their companies to the government after accusing them of illicit business activities.
But Lee and Samsung managed to come back stronger than ever, ironically helped by the Park government policies to encourage exporters.
Then Chun Doo-hwan, another military strongman who came into power at the eye of the 1980s, delivered another blow by seizing Lee's television and radio stations as part of his oppressive media policies.
This was when Lee responded with what many regard as his true masterstroke and a defining moment for the country that later earns its stripes as a high-tech nation ― deciding to pour more than $500 million into a new semiconductor business.
The Grand Chip Gamble
Today, Samsung Electronics is the world's leading producer of computer memory chips and flash memories used in digital devices such as mobile-phones, multimedia players and cameras.
But when Lee, then at the grand age of 73, announced his semiconductor aspirations in 1983, he generated more skepticism than excitement from the business community and policymakers.
``Everybody had their own concerns. A few Japanese companies were dominating the global semiconductor market back then and many wondered whether Samsung would ever achieve the level of technology or gain the wealth of engineering talent to compete with them,'' Yang said.
``Even Anam, despite its experience in assembling semiconductors, refused to touch the subject when Lee announced that Samsung would be fabricating its own chips.
``But Lee was convinced that semiconductors were the `rice' for the information-technology era and there was also a critical need to reduce the reliance of our main businesses on foreign parts. We were losing more than 200 billion won out of the gate, but Lee continued to insist on expanding manufacturing lines and hiring more U.S.-educated engineering talent with the sheer determination to get things done.''
Samsung Electronics began producing 64-kilobit dynamic random access memory (DRAM) chips in 1984, and three years later, by the time of Lee's death, announced itself as a serious industry player by creating the world's first 1-megabit chip, a jump that most industry watchers expected would take six or more years.
By 1994, Samsung Electronics, under the leadership of Lee Kun-hee, was making the first chip that held 250 megabits of data and was firmly established as the world's largest producer of DRAM and flash memory.
Currently, the Samsung Electronics' semiconductor division generates around 20 trillion won in annual sales, and along with liquid crystal displays (LCDs), mobile phones and consumer electronics, accounts for one of the company's four major revenue generators.
There is no doubt that Lee's decision to bet Samsung's future on semiconductors paid handsomely. The leadership in chips provided the foundation for Samsung Electronics' digital convergence strategy and allowed it more time to grow as a premium consumer brand in televisions and mobile phones, which seem to be for Samsung what the Walkman was for Sony.
Under the successful leadership of Lee Kun-hee, Samsung Electronics has grown into the world's largest electronics maker with an ideal balance in components and finished products. The company is the global leader in memory chips, digital displays and flat-screen televisions, and trails only Nokia as the No. 2 handset vendor.
``When the very first chips came out of our assembly lines, (the elder) Lee was smiling ear to ear, bursting into laughter like a child ― I don't recall a moment when he was happier,'' Yang said.
Love for Grandchildren, Cigars and Two-Piece Suits
Although the elder Lee gained great respect from the public for his acumen and industriousness as a business executive, less has been known about the person behind the tie and gold-rim glasses.
At least from the public's point of view, the lack of emotion generated by Lee's character was perhaps the most distinctive difference between him and Hyundai's Chung, a larger-than-life figure whose persona was never limited by his corporate role.
Chung, who died in 2001, always appeared comfortable at the center of attention, evidenced by his presidential bid in the 1992 election, and was an engaging personality who enjoyed his dual reputation as an industrial maverick and beloved grandfather figure.
In comparison, Lee never showed much of his personal side, and this led the public to shape a perception of his character based on the way he did business. So it seems that everyone has the same idea of the kind of person Lee was ― an expressionless straight-talker with ice water running in his veins.
Yang says Lee indeed had a softer and more ``romantic'' side. According to Yang, Lee was a man who rarely left home without dressing up in one of his favorite two-piece suits, who would halt business inspections to enjoy the spring flowers, but also a down-to-earth boss who didn't mind sleeping on concrete floors along with his factory workers.
Lee never concealed his affection for his grandchildren, including Lee Jae-yong, the son of Lee Kun-hee and now chief operating officer (COO) of Samsung Electronics, and Lee Mie-kyung, now the vice chairwoman of the CJ Group.
Lee would often let Lee Jae-yong sit on his lap on the ride to work, and applauded deliriously from the seats when Lee Mie-kyung won a children's English speaking contest, Yang said.
Still, Yang admits that Lee's no-nonsense personality, which helped him succeed as a businessman, was perhaps the truest representation of him as a person.
``He was a man who always put logic first, whether in business or in any other decisions in personal life. Lee was not a man to ever crave for public attention, so I guess this had people thinking that he was a cold person,'' Yang said.
``Lee was indeed a reserved person who enjoyed having some time for himself. He had a love for cigars, played some golf and occasionally had some glasses of wine.
``In Lee's mind, the most patriotic thing a businessman could do was make a lot of money, hire and train more people, and put the country's economy onto a different level. To him, a company that failed to generate profit was committing a sin.''
thkim@koreatimes.co.kr
Profile of Yang In-mo
 Yang In-mo, 70, first joined the Samsung Group as a journalist for the vernacular daily JoongAng Ilbo, which was then run by the conglomerate, in 1966. Yang took a larger role regarding the group's business management in 1968 when he was chosen to lead the secretary team supporting Samsung founder and then-chairman, Lee Byung-chull.
Lee's secretary team had an integral role in Samsung's management, acting as the control tower managing the conglomerate's increasing number of subsidiaries and monitoring the execution of business strategies. The secretary team preceded Samsung's corporate restructuring office, which was a central management tool for his son, Lee Kun-hee, who succeeded as chairman after his death in 1987.
Yang worked in Lee's secretary team until 1973, and then moved to Samsung's international trading operation, Samsung Mulsan, which today is currently merged under Samsung C&T.
Yang was named as the head of Samsung Mulsan's German office in 1976 and led the company's electronics product export division in 1978. Later that year, Yang moved to Samsung Construction and Engineering, now also under Samsung C&T, and held several executive roles in the company's overseas business divisions over the next decade, heading the company's Iraqi, Libyan, and United States units and was named as chief of international operations in 1989.
After a brief stint as the chief executive of Anam Construction, Yang returned as the international head of Samsung Construction in 1995, before moving to Samsung Engineering and holding the management helm at the company from 1997 to 2003.
Yang, a devout Buddhist, speaks three languages aside of his native tongue ― English, German and Japanese ― and is currently using his wealth of experience in international trade as the honorary consul general of Croatia to Korea.
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무디스, 스페인·伊·포르투갈 신용등급 강등
