Samsung Corporation of South Korea has emerged as a new global economic player, currently employing over 66,000 people in some 50 countries worldwide. In 2007 Samsung Electronics, the fastest growing subsidiary of the Samsung Group, had 25 production bases worldwide and 59 branches in 46 countries, in North and South America, Europe, the Middle East and Africa, southeast and central Asia, and China. The multinational corporation, originating from one of the Newly Industrialized Countries (NICs), was ranked 21st among the world’s top global brands. Samsung has been grown as a leader in cell phones, home-theater systems, flat-panel TVs, computer screens, and flash memory (Rose 2005). In these consumer electronics categories, the mega-corporation ranked in the top three in the global market.
While Tokyo-based Sony has strived for better integration of its software and electronics businesses, Samsung’s key goal has placed itself next to Sony, through concentrating on electronics. Of most significance among Samsung Corporation’s many divisions, Samsung Electronics saw record profits and revenue in 2004–2005 overtaking Sony Corporation. Samsung earned a profit of more than 10 billion USD on sales of 56 billion USD in 2004, whereas Sony’s profit was 1.53 billion USD on revenues of 66.9 billion USD in 2005. Samsung’s rapid growth as a dominant global player has benefited greatly from its dense linkages to the Korean government, together with Korea’s low labor costs, universal broadband Internet access, and affinity for electronics (Knowledge@Wharton 2005).
Established in 1938, Samsung – which literally means “three stars” – started with the export of agricultural and marine products to Manchuria and Beijing. During the 1970s, Samsung invested in the heavy, chemical, and shipbuilding industries. From the early 1980s, Samsung succeeded in launching a semiconductor industry and an electric home appliance business, not only domestically but also internationally. Since the early 1990s, when Samsung tailored its business strategies for the age of globalization, Samsung Electronics was positioned at the top of the dynamic random access memory (DRAM) semiconductor market. In the financial crisis of 1997, when the International Monetary Fund (IMF) forced the Korean market to follow its structural adjustment program, many Korean mega-conglomerates collapsed in the restructuring of the domestic economy that ensued, but Samsung seized its opportunity and jumped into first place in the domestic market. Samsung Electronics became the number one company in both global and domestic market share for DRAM semiconductor chips, thin film transistor liquid crystal displays (TFT-LCDs), code division multiple access (CDMA) mobile phones, and computer monitors.
Riding the “Korean wave” – the growing appeal of Korean popular culture in other Asian countries – Samsung and its rapid growth signified the new global influence of capital from the NICs. According to Wallerstein’s (1979) “world system” thesis or the dependency theories (Frank 1969; Evans 1979) concerning South America, the topological status of Korea and its corporations should be no more than a semi-peripheral hub for promoting and connecting global and Asian trade and industry within the hierarchical totality of a global economy divided into three tiers of states (the core, the semi-periphery, and the periphery). Samsung, however, transcended the status of sub-contractor that such theoretical models would predict. Samsung Corporation rapidly rose to be a leader in the global high technology industry, with 13,000 researchers representing investment of 1.7 billion USD in research and development as of 2005. The extraordinary success story of Samsung can be explained by the East Asian form of stateinterventionist economic development, in which it becomes relatively feasible to escape the structural constraints of the hierarchical global economy.
The different divisions of Samsung were a set of huge monopolies, and the corporation as a whole ranked as number one among Korea’s ruling conglomerates, accounting for one-fifth of the country’s exports. Samsung Corporation encompassed almost every profitable industry under its business logo: Samsung Electronics, Samsung SDI, and Renault Samsung Motors, as well as Samsung securities, life insurance, credit card, heavy industries, engineering, the Everland theme park, advertising, petrochemicals, shopping, cable channels, and so forth.
Samsung’s rapid capital accumulation has been made possible by its omnipresent power in the Korean economy and society – described by such common terms as “Samsung’s way” or “the Republic of Samsung” – and by its collaboration with the state in controlling the labor market. Samsung’s economic power has been largely based on the long-lasting struggle of Samsung’s founding family, the Lee family, against the creation of labor unions within Samsung Corporation, and by government interventionism favoring the Chaebols – the large family-owned Korean conglomerates such as Samsung. The elite company became the number one brand in the world in several areas, producing a 3G phone with satellite television, a credit-card-sized camcorder, the world’s biggest plasma television, and the world’s first 5-megapixel camera phone, at the same time as the Korean government’s Chaebol-driven growth policies enabled it to suppress workers’ attempts to unionize. Samsung’s brand image as one of the high-tech global leaders, therefore, sprang not only from its own successful business strategies and goals but also from its special mode of capital accumulation aided by state interventionism, that is to say, a structural symbiosis between the anti-labor business climate in Samsung and the state’s regulatory labor control.
While Samsung contributed significantly to promoting Korea’s national economy in the global market, its dominant market power, with a total of 62 subsidiaries and a sales record of 1.39 trillion USD (as of April 2005), made it a pervasive and overwhelming force in both the Korean economy and Korean society.
References:
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- Frank, A. G. (1969). Capitalism and underdevelopment in Latin America: Historical studies of Chile and Brazil, rev. edn. New York: Monthly Review Press.
- Knowledge@Wharton (2005). As Sony gets a tune-up, Samsung zooms ahead, October 19. At: http:// knowledge.wharton.upenn.edu/article.cfm?articleid=1293, accessed October 3, 2007.
- Rose, F. (2005). Seoul machine: How Samsung made Korea a consumer electronics superpower. Wired, 13(5), 126–131.
- Samsung Group (2006). Timeline and history. At www.samsung.com/AboutSAMSUNG/ SAMSUNGGroup/TimelineHistory/index.htm, accessed October 3, 2007.
- Wallerstein, I. M. (1979). The capitalist world-economy: Essays. Cambridge: Cambridge University Press.