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Samsung Group
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The Samsung Group is South Korea's largest company or chaebol and the world's second largest conglomerate by revenue, leading several industries in the world. It is composed of numerous international businesses, all united under the Samsung brand, including Samsung Electronics, the world's largest electronics company, Samsung Heavy Industries, one of the world's largest shipbuilders and Samsung Engineering & Construction, a major global construction company. These three multinationals form the core of Samsung Group and reflect its name - the meaning of the Korean word Samsung is "tristar" or "three stars".
The Samsung brand is the best known South Korean brand in the world and in 2005, Samsung overtook Japanese rival Sony as the world's leading consumer electronics brand and became part of the top twenty global brands overall. It is also the leader in many domestic industries, such as the financial, chemical, retail and entertainment industries.
BackgroundSamsung Group is South Korea's largest company and exporter and the world's second largest conglomerate, only behind the U.S. based General Electric. Currently helmed by Lee Soo-bin, CEO of Samsung Life Insurance, it has been run by generations of one of the world's wealthiest families, formerly by chairman Lee Kun-Hee, the third son of the founder, Lee Byung-Chul. Samsung Group is recognized as the most prestigious firm in South Korea, attracting many of the country's most intelligent and talented pupils, with 25% of its employees having a PhD degree or equivalent. Samsung Group also owns the Sungkyunkwan University, a major private university in South Korea, with many of its graduates being employed by Samsung Group affiliates. South Korean Samsung employees are also highly loyal to the company, working for very long hours with no weekends or holidays until they retire.
Many major South Korean corporations such as CJ Corporation, Hansol Group, Shinsegae Group and Joong-Ang Ilbo daily newspaper were previously part of the Samsung Group, split apart by the government in order to reduce its power. Many leading companies in South Korea, notably iriver, the No.1 MP3 Player maker in South Korea and Naver, the No.1 Search Engine portal in South Korea, were established by ex-Samsung employees. A large number of South Korean firms, particularly those in the electronics industry, are dependent on Samsung for the supply of vital components or raw materials such as semiconductor chips or LCD panels. Consequently, Samsung is able to artificially moderate prices and has been criticised for handicapping other rivals, leading to bankruptcy of mid to small sized businesses as they cannot compete with Samsung. As a result, many have been taken over by Samsung Group, leading to a complete dominance by Samsung Group in many industries.
Samsung Group accounts for more than 20% of South Korea's total exports, with strong government support, including the ability to access unlimited amount of funds from major banks in South Korea. In many domestic industries, Samsung Group is the sole monopoly dominating a single market, its revenue as large as some countries' total GDP. In 2006, Samsung Group would have been the 34th largest economy in the world if ranked, larger than that of Argentina. The company owns or has taken over so many mid to small sized businesses that it is often called a 'colonial empire' or 'hungry dinosaur'. Samsung is known as "Another Family" in South Korea and many Koreans are highly loyal to the Samsung brand, considering it a symbol of national pride. The company has a powerful influence on the country's economic development, politics, media and culture, being a major driving force behind the Miracle on the Han River; many businesses today use its international success as a role model.
History
1930s - 1980s
- 1938: Lee Byung-Chul founded his small business as 'Samsung Store' at Daegu
- 1950: Lee Byung-Chul founded Samsung trading company in Seoul (YPM)
- 1953: Samsung starts sugar production, which has since been spun off into the CJ Corporation
- 1954: Cheil Industries founded
- 1958: Samsung starts insurance business
- 1963: The first Shinsegae department store opens in Seoul
- 1964: Samsung starts Tongyang Broadcasting Company (TBC), which later merged with KBS
- 1965: Samsung starts the Joong-Ang Ilbo daily newspaper, which is no longer affiliated with the company
- 1969: Samsung Electronics was founded
- 1974: Samsung Petrochemical and Heavy Industries were founded
- 1976: The company was awarded an export prize by the government as a part of the country's development program
- 1977: As a result of this export prize, Samsung Construction emerged. In addition, Samsung Shipbuilding is formed
- 1982: Samsung establishes a professional baseball team
- 1983: Samsung produces its first computer chip: a 64k DRAM chip
Lee Byung-Chul founded Samsung in 1938. It started as a small trading company with forty employees, located in Seoul. The company did fairly well until the Communist invasion in 1950 which caused great damage to his inventories. He was forced to leave and start over in Suwon in 1951. In just a year, the company’s assets had grown twentyfold. In 1953, Lee created a sugar refinery—the South Korea’s first manufacturing facility after the Korean War. “The company prospered under Lee’s philosophy of making Samsung the leader in each industry he entered” (Samsung Electronics). The company started moving into service businesses such as insurance, securities, and department store. In the early 1970s, Lee borrowed money from foreign companies to begin the mass communication industry by launching a radio and television station (Samsung Electronics).
South Korean President Park Chung-hee’s regime during the 1960s and 1970s, helped Samsung Electronics and many other Korean firms. Park put great importance in increasing economic growth and development, and assisted large, profitable companies, protecting them from competition and aiding financially as well. His government banned several exterior companies selling consumer electronics in South Korea. “To make up for a lack of technological expertise in South Korea, the South Korean government effectively required foreign telecommunications equipment manufacturers to hand over advanced semiconductor technology in return for access to the Korean market” (Samsung Electronics). This enormously helped Samsung to manufacture the first Korean dynamic random access memory chips. “Furthermore, although Samsung Electronics was free to invest in overseas companies, foreign investors were forbidden to buy into Samsung” (Samsung Electronics). Samsung quickly thrived in the domestic market.
Samsung Group later formed several electronics-related divisions, such as Samsung Electron Devices Co., Samsung Electro-Mechanics Co., Samsung Corning Co., and Samsung Semiconductor & Telecommunications Co., and grouped them together under Samsung Electronics Co., Ltd. in 1980s. Its first product was a black-and-white television set (Samsung Electronics).
In the late 1980s and early 1990s, Samsung Electronics invested heavily in research and development, constructing the company as a leader in the global electronics industry. “By the 1980s Samsung was manufacturing, shipping, and selling a wide range of appliances and electronic products throughout the world” (Samsung Electronics). In 1982, it built a television assembly plant in Portugal; in 1984, it built a $25 million plant in New York; and in 1987, it built another $25 million facility in England (Samsung Electronics).
The 1990s and present - 1996: Commercialization of CDMA Handset/System
- 1997: Commercialization of GSM Handset
- 2000: Commercialization of World’s 1st Handset/System - CDMA2000 1X
- 2002: Commercialization of World’s 1st Handset/System - CDMA2000 1X EV-DO
- 2003: Commercialisation of World's 1st Silver Nano washing machine using antibacterial silver nanoparticles
The 1990s saw Samsung rise as an international corporation. Not only did it acquire a number of businesses abroad, but also began leading the way in certain electronic components. Samsung's construction branch was awarded a contract to build one of the two Petronas Towers in Malaysia, Taipei 101 in Taiwan and the Burj Dubai in United Arab Emirates, which is the tallest structure ever constructed. In 1996, the Samsung Group reacquired the Sungkyunkwan University foundation.
In 1993 and in order to change the strategy from the imitating cost-leader to the role of a differentiator, Lee Kun-hee, Lee Byung-chul’s successor, sold off ten of Samsung Group's subsidiaries, downsized the company, and merged other operations to concentrate on three industries: electronics, engineering, and chemicals (Samsung Electronics).
Compared to other major Korean companies, Samsung survived the Asian financial crisis of 1997-98 relatively unharmed. However, Samsung Motor Co, a $5 billion venture was sold to Renault at a significant loss. Most importantly, Samsung Electronics (SEC) was officially spun-off from the Samsung Group and has since come to dominate the group and the worldwide semiconductor business, even surpassing worldwide leader Intel in investments for the 2005 fiscal year. Samsung's brand strength has greatly improved in the last few years.
Samsung became the largest producer of memory chips in the world in 1992. In 1995, it built its first liquid-crystal display screen. Ten years later, Samsung grew to be the world's largest manufacturer of liquid-crystal display panels. Sony, which had not invested in LCDs, contacted Samsung to cooperate. In 2006, S-LCD was established as a joint venture between Samsung and Sony in order to provide a stable supply of LCD panels for both manufacturers. S-LCD is owned by Samsung and Sony 51% to 49% respectively and operates its factories and facilities in Tangjung, South Korea.
Considered a strong competitor by its rivals, Samsung Electronics expanded production dramatically to become the world's largest manufacturer of DRAM chips, flash memory, optical storage drives and it aims to double sales and become the top manufacturer of 20 products globally by 2010. It is now one of the world's leading manufacturers of liquid crystal displays and next generation mobile phones.
Samsung has also tried hard to improve its international image. It has spent more than $6 billion since 1998 on marketing, sponsoring the last five Olympics and erecting a large video sign in Times Square in 2002 (Lee kun-hee). Samsung is very involved in the Asian Games, contributing Samsung Nations Cup Riding Competition, Samsung Running Festival, Samsung World Championship, and still many more around the globe. (Samsung Electronics).
Samsung Electronics, which saw record profits and revenue in 2004 and 2005, overtook Sony as one of the world's most popular consumer electronics brands, and is now ranked #20 in the world overall.
By late 2005, Samsung had a net worth of US$77.6 billion.
Markets
Currently, Samsung has sixteen products that have dominated the world’s market share, including: DRAM, color cathode-ray tube TVs (CPT, CDT), SRAM, TFT-LCD glass substrates, TFT-LCD, STN-LCD, tuner, CDMA handset, color television (CTV), monitor, flash memory, LCD Driver IC (LDI), PDP module, PCB for handheld (mobile phone plates), Flame Retardant ABS, and Dimethyl Formamide (DMF).
Plus in the Television market, Samsung and LG make the only screens for LCD TFT televisions and then later sell them on to the other companies.
According to Interbrand and BusinessWeek, Samsung’s brand value ranked 43rd (USD 5.2billion) in 2000, 42nd (USD 6.4 billion) in 2001, 34th (USD 8.3 billion) in 2002, 25th (USD 10.8 billion) in 2003, 21st (USD 12.5 billion) in 2004, and 20th (14.9 billion) in 2005 among top global companies.
In terms of export that directly contributes to the Korean economy, Samsung took up 18.1% of the all exports with USD 31.2 billion in 2000 and 20.7% with USD 52.7 billion in 2004. In addition, Samsung's tax payments to the Korean government in 2003 was KRW 6.5 trillion, which is about 6.3% of total tax revenue.
The market value of Samsung in 1997 reached KRW 7.3 trillion in 1997, which amounted to 10.3% of the Korean market but this figure increased to KRW 90.8 trillion taking up 22.4% in 2004.
Moreover, the annual net profit of Samsung marked KRW 5.8 trillion in 2001, KRW 11.7 trillion in 2002, KRW 7.4 trillion in 2003, and KRW 15.7 trillion in 2004, showing forth a steady increase.
In order to enhance the working environment and build a strong and trustworthy foundation, the semiconductor sector of Samsung Electronics has been conducting a ‘Great Workplace Program’ called GWP since 1998. Then, in 2003, GWP has spread throughout the entire Samsung Group as Samsung Fire and Marine Insurance, Samsung SDI, Samsung Everland, Samsung Corporation, Cheil Industries, Samsung Networks, and others started to apply its core principles. In 2006, 9 subsidiary companies of Samsung Electronics, 80 overseas branches, and 130 overseas business sectors have reported that they are actively applying the GWP.
Dramatic surge in Net Profits starting in the late 90's: $2.2Bil (1999), $7.3Bil (2000), $8.9Bil (2002), $11.8Bil (2004).
Samsung's Brand Value conducted by Interbrand of the world's top 100 brands: $6.4Bil (2001), $8.3Bil(2002), $10.8Bil(2003), $12.5Bil(2004), $14.9Bil(2005).
Market Capitalization (Ratio to the total market value of all Korean listed stocks): A dramatic increase from 7.3 trillion KRW, 10.3% of the total national listing value in 1997. At the end of 2004 national listing value in 22.4%.
Samsung's Annual Profits Growth: $4.5Bil (2001), $8.9Bil (2002), $5.6Bil (2003), $11.8Bil (2004) and Debt-to-Equity Ratio Decrease: 104% (2000), 78% (2001), 68% (2002), 56% (2003), 51% (2004).
Circular investment
The relations of Samsung companies are very complicated. According to the Financial Supervisory Service of South Korea, Samsung Everland owns 13.3% of Samsung Life Insurance; Samsung Life Insurance holds 34.5% of Samsung Card and 7.2% of Samsung Electronics, as well as more of other Samsung companies; Samsung Electronics in turns keeps 46.0% of Samsung Card and stocks of other Samsung companies; and finally, Samsung Card holds 25.6% of Samsung Everland.
The family of Lee Kun-hee owns 40% of Samsung Everland, whilst Samsung Card holds 25.6%, and related people have another 30%. Thus it is thought that Lee controls 95% of Samsung Everland. Control of one company, through the circular investment, enables the Lee family to control other Samsung companies despite having only relatively minor holdings.
Sports sponsorship
Samsung owns the professional soccer club Suwon Samsung Bluewings, the baseball team Samsung Lions, the basketball team Seoul Samsung Thunders, the women's basketball team Samsung Bichumi, and the volleyball team Samsung Bluefangs in South Korea.
In 2005 Samsung signed the second biggest sponsorship deal in English football history with Premiership member Chelsea. Their five-year deal is estimated to be worth £50 million.
The company sponsors the rugby league team the Sydney Roosters in the Australian National Rugby League 1995-1997 2004-present. It also sponsors the Melbourne Victory football club in the Australian A-League. The deal with Victory is also believed to be the largest in Australian club football history.
Samsung is a sponsor of the April NASCAR Nextel Cup race at Texas Motor Speedway, the Samsung 500. This sponsorship, initially with RadioShack from 2002-2006, was in doubt after the 2003 race because of NASCAR's ban on wireless telecommunication sponsors effective the 2004 season, but was grandfathered into the Nextel contract. (Nextel uses exclusively Motorola equipment.) However, after Sprint's merger with Nextel, the ban was rescinded for Samsung, because of Sprint's sale of Samsung products.
Samsung has been a Worldwide Olympic Partner since 1997 in the Wireless Communications category.
In April 2008 Samsung and Mexican Futbol team Club Deportivo Guadalajara signed a sponsorship deal for six years where Samsung will provide 865 Plasma and LCD screens for the teams new stadium Estadio Chivas. Also it will be in the front of the team's jersey starting January 2009.
Samsung currently sponsors French People's Baseball Team.
Samsung is planing to start a cricket league in India with the prize money of $20 million(Samsung Plans to construct 9 stadiums by the end of 2009)
Subsidiaries of the Samsung Group
Electronics industries
Machinery and heavy industries
Chemical industries
- Samsung BP Chemicals
- Samsung Cheil Industries
- Samsung Fine Chemicals
- Samsung Petrochemicals
- Samsung Total
Financial services
Retail services
Engineering & construction
Entertainment
Others
Main Competitors
See also
External links
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