Sunday, 25 September 2016 13:28

Samsung touches us all – South Korea’s ethos drives it

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There would be few people in South Korea that Samsung does not touch in some way – after all, it represents more than 28% of the country’s Gross Domestic Product. Hyundai is next at 12%.

And worldwide its memory, processors, screens, smartphones, laundry, kitchen, TV, air conditioning, ship building, oil refinery plants, power plants, wind farms, heavy industries, chemicals, finance/insurance/securities, medical, hotels/theme parks/resorts, biologics, construction, aerospace, and too many more to list, are sold in almost every country.

Few know that the company dates back to 1938 – when Lee Byung-chul, a landowner, founded Samsung to deal in locally-grown produce and continued to expand into noodles, sugar, wool and other primary products. It was also the beginnings of its construction and finance divisions.

Samsung Group today is a public company. The current chairman is Lee Kun-hee, son of the founder. But the real power is in the board with Lee Jae-yong (48, Harvard-educated, son of the current chairman) and its vice-chairman — the chief executive of Samsung Electronics — Dr. Oh-Hyun Kwon who brings new blood and thinking to the company.

Samsung’s development in many ways parallels South Korea and the ethos of its people – an independent country formed in 1948 nestled below North Korea (joined to Russia at the North), 400km from China by sea, not much further from Japan, and mercilessly invaded, ravaged, for its natural resources, people, and lands. It is home to over 50 million with 26% each being Christian and Buddhists, and the remainder claim no religious affiliations although most follow Confucianism.

As an outsider — it was my first visit to South Korea — my first vision as the plane descended over Incheon Airport was of a mountainous terrain with masses of cream coloured high rise dwellings – if you lack land then up you go!

Korea highrise

I don’t intend to give a history lesson covering numerous wars and occupations – you can read Wikipedia for that.

On the people front, they seem to be a mix of Chinese and Japanese heritage. They have a fierce independence and determination to show the world what Korea and its people are made of. They are highly educated, polite, and hard-working.

Post-Korean war governments have punched well above their weight to educate the people in STEM (science, technology, engineering, and maths), have had an extremely progressive and aggressive attitude to building the economy, and created a culture that is neither Chinese or Japanese but distinctly Korean.

Former president Park Chung-hee is said to have engineered the transformation of the national character. In his era, Koreans were heavily guided into being energetic, diligent, ambitious, nationalistic, and goal achieving go-getters. It shows.

This has led to the imperative ppalli-ppalli culture (meaning “hurry, hurry”) which focuses on getting things done as quick as possible and they are not risk adverse. Koreans are generally said to be “hot, aggressive, energetic, emotional and upfront".

The South Korean emblem is simply the Yin/Yang symbol — two halves in complete balance — separated by a meandering river Han.

All this has helped it grow from one of Asia’s poorest countries — it is strictly anti-communist/socialist — to meeting or beating Singapore, Taiwan, and Hong Kong.

Enter Samsung Electronics.

In the late 1960s Samsung entered the electronics field with a black and white TV set. The remainder of the article is not about the whole group of more than 80 companies (you can read about that here).

Samsung Electronics started to take off in the 1980s when it invested heavily in R&D and opened manufacturing plants in Portugal, Tokyo, and New York and Austin, Texas. Samsung has one of the largest investments in US electronics. It felt that it was important to have close ties with its major markets.

In just a few short years, say from 2005, Samsung Electronics has become a global behemoth of incredible proportions. It directly employs around 300,000 people and supports millions more via its suppliers and partners. Samsung employs more software engineers than Google’s total employee headcount. It is the world’s second-biggest R&D spender – US$14.1 billion, following Volkswagen. Intel and Microsoft are next at about US$11.5 billion each.

By comparison, Apple has a shade over 80,000 employees and spends about US$6 billion on R&D (staff numbers are heavily biased to sales/ and market support).

That has led to Samsung being the world’s largest supplier of memory chips, the world’s second-largest chipmaker (processors, etc.), and the world's largest maker of LCD screens. It also invested in strategic partners like Sony, Corning, and other IT-related developers where the intellectual property could be applied to Samsung products. Samsung, unlike any other major electronics company, makes most of its components and products – it is in charge of its supply chain, and that makes it very much stronger.

Has it done everything right along the way? Note7 and certain washing machine owners may complain! I won't sugarcoat it – no, it did not do everything right in its quest to grow and dominate, but then Amazon, Apple, Google, Microsoft, et al., all have done things they regret too.

But I suspect it is doing everything right under a new generation of leadership with a strong social conscience. I cannot recall a company that has acted so quickly and positively as it did over the Note7 issue, and I do think the washing machine incident was good training for it. In the few years, I have been “Samsung-watching” it seems to have moved from a commodity goods manufacturer to a designer, and finally to an aspirational brand – a sign of maturity.

What I learned from this trip is that Samsung Electronics is an innovator. It is not just the flagship Galaxy S7/Edge, and the Note7 take the crown for the best Android devices in 2016. Its work for example in 64-layer, 2 and 3-bit, MLC, 3D-VNAND and other semiconductors is leading edge and will provide memory, storage and compute for the next generation of smart devices – double the capacity in the same size die for ostensibly the same manufacturing costs.

It is driven by its Vision 2020. I have no doubt it will achieve it.

Samsung Electronics' vision for the new decade is to "Inspire the World, Create the Future."

It is committed to inspiring communities around the world by developing new technologies, innovative products, and creative solutions. It is also committed to creating a brighter future by developing new value for its core networks: industry, partners, and employees. Through these efforts, it hopes to contribute to a better world and a richer experience for all.

As part of its vision, it has mapped out a specific plan of reaching $400 billion in revenue and becoming one of the world’s top five brands by 2020. To this end, it has also established three strategic approaches in its management: creativity, partnership, and talent.

It is excited about the future. As it builds on our previous accomplishments, it looks forward to exploring new territories, including health, medicine, and biotechnology. It is committed to being a creative leader in new markets and becoming a truly No. 1 business going forward.

The writer was a guest of Samsung at the SSD Summit, Seoul, South Korea.

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Ray Shaw

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Ray Shaw ray@im.com.au  has a passion for IT ever since building his first computer in 1980. He is a qualified journalist, hosted a consumer IT based radio program on ABC radio for 10 years, has developed world leading software for the events industry and is smart enough to no longer own a retail computer store!

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