wow, that is big
`Republic of Samsung’ Builds Up in Korea
Samsung Group, South Korea’s biggest conglomerate, is getting bigger and bigger to an extent that many raise grave concerns about its relentless expansion.
With 62 affiliates under its arm, the group accounts for one-fifth of the country’s total exports and its overall turnover carves out more than 17 percent of the national income.
Samsung’s total assets almost match the nation’s annual budget and about one-fifth of Korean tax revenue comes from the group, which was set up in the late 1930s.
The Samsung brand is seen everywhere here as the group retains subsidiaries in wide-ranging areas including electronics, securities, insurance, heavy industries and it even has an amusement park.
Considering its numerous subcontractors and satellite groups, Samsung’s power is almost immeasurable in every corner of this society.
The groups of Shinsegae, CJ, Hansol and Saehan are also related to Samsung, as the conglomerates are all owned by relatives of Samsung Chairman Lee Kun-hee.
Also Samsung men, who once worked for the group, are literally ubiquitous in the business communities like SK Telecom president Kim Shin-bae and Woori Bank chief executive Hwang Young-key.
Among politicians and government officials, National Assembly secretary general Namgoong Suek, Information-Communication Minister Chin Dae-je and Korean Ambassador to the U.S. Hong Seok-hyun, who is also the brother-in-law of chairman Lee, are all Samsung men.
On the back of its huge size, cream-of-the-crop manpower and broad-based networks of ex-employees, the group’s influence on society is constantly expanding, causing some to call the country the “Republic of Samsung.”
The power of Samsung sometimes results in unacceptable moves as amply demonstrated late last month when four Samsung Total employees balked the government’s anti-trust probe by stealing a document under investigation.
In this climate, Hanshin University professor Kim Jong-yup claims that Samsung’s ever-increasing and far-reaching clout should be brought under control.
“Now it is difficult for even the government to keep a tight rein on Samsung. In reality, our whole society is at the risk of coming under control of the group,” the 42-year-old said.
“Samsung should be the checked by the people. It’s high time for citizens to stage a movement geared toward preventing the conglomerate from overwhelming society,” he added.
Chaebol refers to Korea’s sprawling conglomerates, in which founding families exercise substantial control despite small direct shareholdings.
The Samsung Group is the largest chaebol here by any measure.
With 62 affiliates under its wing, the business giant holds 108 trillion won in assets as of the end of 2004, almost equal to last year’s government budget of 117 trillion won.
Samsung’s overall turnover amounted to 135.5 trillion won last year, representing 17.4 percent of the nation’s gross domestic product (GDP) of 778.4 trillion won.
The group’s 2004 exports stood at $52.7 billion, even excluding its revenues from overseas operations, to account for 20.8 percent of Korea’s total outbound shipments of $253.8 billion.
According to U.S.-headquartered consulting company Interbrand, Samsung is ranked 21st among the world’s top brands, just a notch below Japan’s Sony.
Samsung, which means three stars in Korea, was established in 1938 by the late Lee Byung-chull as a small exporter of fruit and dried fish. It chalked up notable growth in the 1960s and 1970s in the midst of the government’s exports drive.
Lee Kun-hee, senior Lee’s third son, took the helm of the group in 1987 after his father’s death and catapulted Samsung to one of the world’s top companies by attacking high-tech fields.
Although he sometimes made mistakes like the ill-fated investment in the automobile business, he masterminded many good deals on info-tech segments.
Thanks to the timely capital spending, the group now boasts of flagship units at Samsung Electronics, the world’s largest memory chip and liquid crystal display maker, and Samsung SDI, the world’s leading plasma TV panel vendor.
Also included at Samsung’s strong business line-up are Samsung Securities, Life Insurance, Petrochemical, Engineering and Heavy Industries, the Shilla Hotel and Cheil Industries.
Satellite Groups and Third-Generation Executives
The actual size of Samsung is even larger, if one considers its satellite groups owned by chairman Lee’s siblings, nephews and brother-in-law.
Such groups as Shinsegae, CJ, Hansol, Saehan and Pokwang, which were mostly inherited by chairman Lee’s brothers and sisters, can be categorized under the Samsung roof.
The family of Lee In-hee, the eldest daughter of Lee Byung-chull, owns Hansol, the 42nd-largest chaebol with 10 subsidiaries in telecom and paper sectors.
Lee Jay-hyun, son of Lee Byung-chull’s eldest son Lee Maeng-hee, controls CJ, the 24th-largest conglomerate with 48 affiliates in the areas including food, entertainment, drugs and films.
Saehan, which has been under a debt workout program since 2000, had been operated by Lee Jae-gwan, son of Lee Byung-chull’s second son Lee Chang-hee.
The youngest daughter, Lee Myung-hee, is now running Shinsegae, the 22nd-largest chaebol with 13 units of its department stores, discount chain E-Mart and the Westin Chosun Hotel.
Korean Ambassador to the U.S. Hong Seok-hyun, younger brother of Lee Kun-hee’s wife Hong Ra-hee, owns the Pokwang Group that runs vernacular daily Joongang Ilbo.
In Samsung and its satellite groups, the third-generation chief executives or grandchildren of Lee Byung-chull are emerging to the front.
Hansol CEO Cho Dong-kil, CJ head Lee Jay-hyun and Shinsegae executive vice president Chung Yong-jin can be classified as part of that group.
In the case of Samsung, Lee Kun-hee’s offspring also gain executive posts as his only son and heir apparent Lee Jae-yong is vice president of Samsung Electronics, the group’s iconic unit.
His daughters Pu-jin and Seo-hyun are vice presidents of the Shilla Hotel and Cheil Industries, respectively.
They are already the richest youngsters in Korea.
According to online shareholding information provider Media Equitable (www.equitable.co.kr) in 2003, the third generation of Samsung and its satellite group filled five of the top six spots in the table of Korea’s 50 young millionaires.
Lee Jae-yong of Samsung Electronics was a runaway leader on the list with an estimated wealth of 923 billion won and Shinsegae executive vice president Chung Yong-jin came in the third with 184 billion won.
Lee Kun-hee’s three daughters of Pu-jin, Seo-hyun and Yun-hyung tied for the fourth slot with 179 billion won each. Only runner-up Kim Taek-jin, head of local game developer NCSoft who had 202 billion won, had no relation to Samsung.
This starkly compares to Samsung’s archrival, Hyundai Group, of which the highest rank person on the lsit, Chong Ji-sun, vice chairman of the Hyundai Department Store, ranked 22nd with 49 billion won.