While many people today know Samsung for its fancy products such as smartphones and TVs, many are not familiar with Samsung's long alliance with the South Korean government, which has saved Samsung from many crises and one of the world's largest companies Has helped to become.
Samsung is one of the world's leading tech companies. Unlike some of its American rivals — such as Apple or Dell — Samsung did not make it to anyone's garage or college dorm room. No, Samsung emerged in the wake of the most devastating war in Korean history, and in it, we'll see how all those massacres paved the way for Samsung's global domination.
The first half of the twentieth century was not very good for Korea, say it lightly. After a hundred years of political intervention, the Japanese Empire had reduced Korea to just a puppet state, formally ending it in 1910. As you can imagine, the Japanese occupation was brutal, with many Korean peasants and traders removed from their lands and out of their factories.
As an ambitious colonial power, Japan was eager to settle Korea with its people, which is why Japanese ownership of Korean land, for example, skyrocketed from 8% to 50% in 1910 after twenty years.
For a time, it seemed that the Korean nation was destined for oblivion, the Japanese not only forced Koreans to change their names, they also stopped schools from teaching the language. Despite Korea becoming independent once again during World War II and the chaos of the US and Soviet military administrations in 1945, the people of Korea were cautiously optimistic.
One such optimist was Lee Byung-Chul, one of the few Koreans who started his own business during the Japanese occupation. He created a small transportation company called Samsung in 1938, which specialized in the export of groceries.
From the very beginning, Samsung had a huge competitive advantage: it was located in the south-east coast city of Masan, which the Japanese were using as their largest exit port, from where they carried all the exploited Korean resources.
Now, Lee was not a true ally, but his utility in governance earned him many favors that were not available to most Koreans, such as obtaining loans from Japanese banks.
While Samsung's Japanese era was good for its time, newly-independent South Korea offered immense opportunities. The years immediately after liberation were much more profitable for every Korean businessman for one simple reason: while the Japanese administrators were gone, their wealth remained and the Korean government gave them the right for cents on the dollar to rebuild the country and She was doing left hand.
Everything looks great for Samsung, but then the Korean War broke out. The invasion of North Korea quickly turned into a proxy war between the Soviet bloc and the capitalist West, with modern weapons ravaging large cities and industrial centers in South Korea.
Most of Korea's factories were damaged during the three long years of the war; For example, more than 60% of the textile and chemical facilities of the country's railways were destroyed. At the end of the war — Korea's infrastructure was in dire need of repair, and its companies were too small to sustain its economy, which was honestly on its last legs.
Prices rose dramatically, as the South Korean government was forced to print more money to finance the country's vast military expenditure. Hyperinflation was so extreme that in July 1953, Korea's wealth in circulation was only 24 times greater than it was three years earlier. By extension, South Korea and Samsung's future looked increasingly uncertain, but fortunately, they had Uncle Sam's back. After the war, the US essentially created the Korean version of the Marshall Plan, which was soon followed by the United Nations.
During the 1950s, three billion dollars were sent to the Korean government, which then chose medium and large companies eligible for investment. Samsung was among the companies benefiting from this relief aid, no doubt thanks to Lee's close friendship with the first South Korean president.
Samsung kept in mind the extent of state aid during its tenure. Generally imposing very strict limits on exports, the government essentially gave Samsung a free pass, making it the largest exporter of scrap iron, for example, after the war.
Funding of US relief money at Samsung allowed it to expand beyond simple transportation and into actual manufacturing: in 1953 they began making sugar and flour, and then a year later made textiles. Purchasing and then rebuilding factories wasted by American money was such a lucrative business that Samsung grew at an average of 93% annually during the 1950s. However, relief aid was only part of the picture: the Korean government was also giving generous loans to Samsung at very competitive rates.
Lee was one of the biggest beneficiaries of government lending through government-linked banks, and, even more happily, once he got the money, he made the rounds and started buying the same banks.
By the end of the decade, Samsung had taken over three banks linked to its friend's rule and was also infusing insurance and chemicals. Samsung had grown so large that not even a revolution could bring it down.
Thus, when the army overthrew his friend's rule in 1961, Lee was probably not too worried. Under the new administration, the Korean economy opened up and focused largely on export growth, for which Samsung was perfectly positioned after a decade of state-funded preparations.
Thus, despite a second regime change in 15 years, Lee was once again in the good graces of the Korean government. The most popular Samsung division we know today was
Also made with government assistance: In 1969 the government passed a law on companies working in the electronics business by cutting taxes by 50%, which was too much for Samsung Electronics at the time, which was made the same year.
Samsung became a symbol of Korean modernization during the 70s as it helped bring televisions and washing machines to every family's home, and since then it seems only natural to jump into semiconductors and more recently smartphones. Certainly, this would not be possible without Lee's prolific position, which in his time was close to political power.
even today Samsung and the government go hand-in-hand. Luckily for you, Samsung is a public company, or at least its largest division, so you can easily benefit from the close relationship forged many decades ago.
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