Samsung Founder: Lee Byung-chul

My academic interests focus on Korean big business. An aspect of this study is historic, which includes the opening of Korea to the West and the origins of Korea's global conglomerates. (BTW My new historic novel on Old Korea will be available in December).

An acquaintance of mine is Dr. Andrei Lankov. Professor Lankov is a historian who was born in Leningrad (now St. Petersburg), Russia, and now teaches at Kookmin University in Seoul.

His article in Korea Times on the founder of Samsung is worth reading...

Samsung and Its Founder

Like it or not, but the industrial growth of Korea over the last four decades or so has been driven largely by huge family-owned conglomerates known as chaebol. A handful of these groups produce a large part of the nation’s industrial output, and in recent decades their names are heard everywhere across the globe.

For most of this period, the most prominent of all Korean conglomerates was Samsung, founded almost 70 years ago by Lee Byung-chull, a young son of a very rich landlord family (well, actually his name should be rendered in English as “Yi Byung-ch’ul but wed better call the tycoon in a way he preferred himself).

Indeed, most of the chaebol were once established by the scions of landowning families. However, while the inherited wealth did matter enormously, it did not guarantee anything. Many thousands of landlords’ sons joined the race, but merely hundreds succeeded and only a few dozens stroke it really big, becoming chaebol owners. A lot of other qualities, both ``good and ``bad’ were necessary to become a chaebol founder.

Lee Byung-chull demonstrated the possession of these qualities to a great extent. Born in 1910 in Southern Kyongsang province, for a while he studied at the prestigious Waseda University. This was a rather standard upbringing for a future manager of the family estate. Lee Byung-chull came back home with complete fluency in Japanese and also with good connections with the Japanese business community. For the rest of his life he maintained these relations, and even kept a house in Tokyo (complete with a de-facto Japanese wife). He had a Korean house and a Korean wife as well, needless to say.

In the mid-1930s Lee Byung-chull invested some of the family money into a rice mill and other deals in Masan, and then, in March 1938, founded a medium-size brewing and general trade company. The company, a rather unremarkable upstart in the provincial city of Taegu, bore the name, which was to acquire worldwide fame. It was called Samsung’ or Three stars. When Samsung went global, it changed its logo to include Latin script, but I still remember the times when one could see these three stars on the company logo.

Samsung grew fast through many undertakings, typically related to the food processing and/or international trade, with Manchuria being the major target area. Samsung brewed rice wine, exported rice, imported beans and was engaged in many other businesses.

The liberation of 1945 brought about considerable economic disruption, but Lee Byung-chull survived the period quite well. In 1948 he made a major decision to relocate to Seoul. It was a wise act: in a hyper-centralized country like Korea one has to be in the capital to be taken seriously and to be connected.

While one can surmise that to some extent his company cooperated with the colonial authorities (most companies did), Lee Byung-chull was not tainted by records of active collaboration with the country’s colonial masters. This helped him and other younger businessmen in the late 1940s when the old giants of the Korean business community had to keep a low profile due to their dubious behavior in the colonial times.

In the late 1940s, Samsung specialized in export and import operations. The company exported dry squid to the countries of East Asia and imported thread and sewing machines, then seen as luxury items.

Samsung survived the Korean War, though a large part of the companys property was lost. In January 1951 Lee Byung-chull resumed his business operations in Pusan, the wartime provisional capital of the ROK. Around this time he established good relations with government officials, and this helped him to secure a number of profitable contracts. He was generous with campaign contributions for the incumbent president, and was richly rewarded for such support.

Lee Byung-chull received a government grant and used it, together with private credit, to build a sugar factory in Pusan. It began operations in late 1953. In the subsequent years Samsung diversified to other areas of food processing. In the still starving country this was important and profitable. The company also moved to new areas, like the textile industry, cement production and finance.

So, can Lee Byung-chull be seen merely as a skillful backstage dealer who was lucky and smart enough? Of course, not. Like most other founding fathers of the Korean industry, Lee Byung-chull demonstrated a great business acumen and unbelievable industriousness. During Lee Byung-chull’s lifetime, Samsung had the reputation of a tightly managed company where the boss knew everything. Lee Byung-chull allegedly always sat in on every hiring interview for every new employee from 1957 until 1986 _ a total of some 100,000 interviews.

By the late 1950s, Samsung was already the largest company in Korea (and it was to remain in the top three’ for the subsequent half century). However, this success bred contempt _ more so since many of Lee Byung-chull’s deals arose suspicion of corruption. So, in 1961 when the military took power, Lee Byung-chull suddenly discovered that he, the country’s richest man, was on the ``wanted’ list. He was in Japan, out of immediate danger, and definitely had enough money to comfortably spend the rest of his life. But it was not Lee Byung-chull’s style. Instead, he rushed back to Seoul _ and made an important deal with the new government. The results of this deal to a large extent shaped the Korean economic history of the 1960s and 1970s, but that is another story…

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