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‘Let’s Change Everything Except our Wives and Children’, Lee Kun-hee in 1987 that changed the story for Samsung; Year 2020, A look inside Samsung’s Uncertain Future

We need no introduction to Samsung, a South Korean multinational headquartered in Samsung Town, in Seoul; it was founded in the year 1938 as a trading company.

However, over the next three decades, the company diversified its operations into sectors, including food processing, textiles, insurance, securities, and retail.

In the late 1960s, Samsung entered the electronics industry. By mid – 70s had extended its operations to the construction and shipbuilding industries.

In 1987, following the company’s founder, Lee Byung-chul’s death, the company was divided into four business groups – Samsung Group, Shinsegae Group, CJ Group, and Hansol Group. However, today these groups are independent and not part of or affiliated to the Samsung Group.

Lee Kun-hee, the third son of Lee Byung – chul, became the chairman of the conglomerate on 24th December 1987, and thus happened the famous story.

He believed that the Samsung Group was too focused on producing largescale low-quality goods, and he wanted that to change.

As the famous story goes – and a declaration now known as the ‘Frankfurt declaration,’ Lee got his employees together in the German city and told them – “Let’s change everything except our wives and kids.”

Lee revolutionized the company’s entire operation; he broke away from traditional business methods and emphasized heavily on quality products even if it meant a lower market share.

The declaration was a call for a higher quality of goods, even if that implied less production. That is where the success of Samsung began.

It went on to beat Sony Corporation and became the largest manufacturer of televisions.

Currently Samsung is one of the world’s largest producers of electronic devices. It is also one of the world’s top corporate spenders on R & D and a foundation in South Korea’s economy and credited with one – fifth of the country’s total exports and a significant contributor to its GDP.

1990 – 2000

In the early 1990s, Samsung started to rise as an international brand and was awarded construction projects; the company downsized its operations in 1993 under Lee and focused on three industries – electronics, engineering, and chemicals.

Samsung soon became the Worlds largest producer of memory chips and is currently the second-largest next to Intel.

It created its first liquid–crystal display screen in 1995, and by 2005 it grew to the world’s largest liquid – crystal display panels.

In 2006, Sony got into a collaboration with Samsung, and S-LCD was established. Samsung owned 50% plus one share, and Sony-owned 50% minus one share; as of 26th December 2011, it was declared that Samsung had acquired Sony’s stake in this joint venture.

2000 – present

Samsung moved into digital TV and smartphones in 2000 and officially launched Samsung Solstice, which was later developed into the Samsung Galaxy line of smartphones.

By 2012, Samsung Electronics became the largest mobile phone makers by unit sales globally. They overtook Nokia, which until then had been the market leader.

However, from hereon, Samsung was hit by a slide of misadventures. In early September 2016, Samsung suspended sales of its Galaxy Note7 and announced an informal smartphone recall.

This was due o the faulty batteries that caused excessive heating, leading to explosions and fires. Samsung replaced the recalled units and replaced them with a new version. Still, it was soon found out that the latest versions also had a battery defect. Samsung recalled Galaxy Note7 smartphones worldwide and permanently ended the production of the phones.

While the company was still grappling with its smartphones’ worldwide debacle, the company’s chairman found himself embroiled in controversies and scandals.

Controversies and Apologies

Samsung has seen several controversies and scandals since its incorporation

  • 1996, Lee Kun-hee, along with 10 other prominent businessmen of South Korea, found themselves in a political scandal over ‘corporate contributions’ to the country’s then-President.

The controversy was a peek into how family businesses operate, irrespective of the ‘new’ – way of doing business and breaking away from the traditional model; however, Lee was still in charge and the company’s grand strategic master.

Lee was sentenced to prison for two years, though he received a suspension for three years and was later pardoned by the then President.

  • 2008, Lee again found himself in yet another scandal, this time found guilty of tax evasion and financial wrongdoings. Although the prosecutors asked for a seven-year term, the court handed him three years and $98 million in fines. He again received a pardon from the then President in 2009, primarily so Lee could lobby to bring the Winter Olympics to Pyeongchang in 2018.

Ironically the then President who pardoned Lee himself was sentenced to 15 years in prison after finding that he had accepted $5.4 million as bribes from Samsung to pardon Lee.

  • 2010, a book released by the former legal counsel for Samsung claimed that Lee had stolen up to $8.9 million from Samsung subsidiaries, had tampered with the evidence, and bribed the government officials to ensure that his son succeeds as the heir of the company.

  • 2012, legal action was sought by Lee’s older brother and sister, claiming that he was withholding shares willed by their father, $850 million in Samsung shares, but the case was dismissed by the court.

  • 2014, Lee suffered a heart attack, and his son Lee Jae- young, the Vice Chairman of Samsung, became the de facto leader and the face of Samsung

  • Lee died in the year 2020 and was succeeded by his son Lee Jae-young.

Samsung Hier – Lee Jae-yong and the famous apology

Lee Jae-young, like his father, too, has been involved in a series of scandals.

  • Along with Samsung officials, he was accused of stock price manipulation, breach of trust, and auditing violations related to the merger between Samsung C&T Corp and Chiel Industries in 2015. South Korean prosecutors alleged that the 2015 merger between the two Samsung affiliates was done to help Lee Jae-yong increase his control over the company’s key jewel, Samsung Electronics.

  • In 2017, Lee Jae-yong was sentenced to 5 years in prison for offering $7 million in bribes to the then President and her confidant to seek government support for the 2105 merger. The President who accepted the bribe has been serving a decades-long prison term for bribery, abuse of power, and other corruption charges.

  • 2020, Lee, amidst the coronavirus pandemic, publicly apologized for the company’s misconduct and the controversial plan to succeed as the heir to the company. He apologized for his miss demeanor and promised that he would end hereditary transfer of control And leadership, promising not to pass the management rights he inherited from his father to his children. He also promised that the company would stop suppressing its employee’s rights to organize unions

It remains to be seen what the future holds for Samsung, and if Lee Jae-yong will stick to his promise of not giving control of Samsung to his children; in the meantime, Samsung still remains a brand to reckon with many contributions to the world of Electronic Devices.

We need no introduction to Samsung, a South Korean multinational headquartered in Samsung Town, in Seoul; it was founded in the year 1938 as a trading company.

However, over the next three decades, the company diversified its operations into sectors, including food processing, textiles, insurance, securities, and retail.

In the late 1960s, Samsung entered the electronics industry. By mid – 70s had extended its operations to the construction and shipbuilding industries.

In 1987, following the company’s founder, Lee Byung-chul’s death, the company was divided into four business groups – Samsung Group, Shinsegae Group, CJ Group, and Hansol Group. However, today these groups are independent and not part of or affiliated to the Samsung Group.

Lee Kun-hee, the third son of Lee Byung – chul, became the chairman of the conglomerate on 24th December 1987, and thus happened the famous story.

He believed that the Samsung Group was too focused on producing largescale low-quality goods, and he wanted that to change.

As the famous story goes – and a declaration now known as the ‘Frankfurt declaration,’ Lee got his employees together in the German city and told them – “Let’s change everything except our wives and kids.”

Lee revolutionized the company’s entire operation; he broke away from traditional business methods and emphasized heavily on quality products even if it meant a lower market share.

The declaration was a call for a higher quality of goods, even if that implied less production. That is where the success of Samsung began.

It went on to beat Sony Corporation and became the largest manufacturer of televisions.

Currently Samsung is one of the world’s largest producers of electronic devices. It is also one of the world’s top corporate spenders on R & D and a foundation in South Korea’s economy and credited with one – fifth of the country’s total exports and a significant contributor to its GDP.

1990 – 2000

In the early 1990s, Samsung started to rise as an international brand and was awarded construction projects; the company downsized its operations in 1993 under Lee and focused on three industries – electronics, engineering, and chemicals.

Samsung soon became the Worlds largest producer of memory chips and is currently the second-largest next to Intel.

It created its first liquid–crystal display screen in 1995, and by 2005 it grew to the world’s largest liquid – crystal display panels.

In 2006, Sony got into a collaboration with Samsung, and S-LCD was established. Samsung owned 50% plus one share, and Sony-owned 50% minus one share; as of 26th December 2011, it was declared that Samsung had acquired Sony’s stake in this joint venture.

2000 – present

Samsung moved into digital TV and smartphones in 2000 and officially launched Samsung Solstice, which was later developed into the Samsung Galaxy line of smartphones.

By 2012, Samsung Electronics became the largest mobile phone makers by unit sales globally. They overtook Nokia, which until then had been the market leader.

However, from hereon, Samsung was hit by a slide of misadventures. In early September 2016, Samsung suspended sales of its Galaxy Note7 and announced an informal smartphone recall.

This was due o the faulty batteries that caused excessive heating, leading to explosions and fires. Samsung replaced the recalled units and replaced them with a new version. Still, it was soon found out that the latest versions also had a battery defect. Samsung recalled Galaxy Note7 smartphones worldwide and permanently ended the production of the phones.

While the company was still grappling with its smartphones’ worldwide debacle, the company’s chairman found himself embroiled in controversies and scandals.

Controversies and Apologies

Samsung has seen several controversies and scandals since its incorporation

  • 1996, Lee Kun-hee, along with 10 other prominent businessmen of South Korea, found themselves in a political scandal over ‘corporate contributions’ to the country’s then-President.

The controversy was a peek into how family businesses operate, irrespective of the ‘new’ – way of doing business and breaking away from the traditional model; however, Lee was still in charge and the company’s grand strategic master.

Lee was sentenced to prison for two years, though he received a suspension for three years and was later pardoned by the then President.

  • 2008, Lee again found himself in yet another scandal, this time found guilty of tax evasion and financial wrongdoings. Although the prosecutors asked for a seven-year term, the court handed him three years and $98 million in fines. He again received a pardon from the then President in 2009, primarily so Lee could lobby to bring the Winter Olympics to Pyeongchang in 2018.

Ironically the then President who pardoned Lee himself was sentenced to 15 years in prison after finding that he had accepted $5.4 million as bribes from Samsung to pardon Lee.

  • 2010, a book released by the former legal counsel for Samsung claimed that Lee had stolen up to $8.9 million from Samsung subsidiaries, had tampered with the evidence, and bribed the government officials to ensure that his son succeeds as the heir of the company.

  • 2012, legal action was sought by Lee’s older brother and sister, claiming that he was withholding shares willed by their father, $850 million in Samsung shares, but the case was dismissed by the court.

  • 2014, Lee suffered a heart attack, and his son Lee Jae- young, the Vice Chairman of Samsung, became the de facto leader and the face of Samsung

  • Lee died in the year 2020 and was succeeded by his son Lee Jae-young.

Samsung Hier – Lee Jae-yong and the famous apology

Lee Jae-young, like his father, too, has been involved in a series of scandals.

  • Along with Samsung officials, he was accused of stock price manipulation, breach of trust, and auditing violations related to the merger between Samsung C&T Corp and Chiel Industries in 2015. South Korean prosecutors alleged that the 2015 merger between the two Samsung affiliates was done to help Lee Jae-yong increase his control over the company’s key jewel, Samsung Electronics.

  • In 2017, Lee Jae-yong was sentenced to 5 years in prison for offering $7 million in bribes to the then President and her confidant to seek government support for the 2105 merger. The President who accepted the bribe has been serving a decades-long prison term for bribery, abuse of power, and other corruption charges.

  • 2020, Lee, amidst the coronavirus pandemic, publicly apologized for the company’s misconduct and the controversial plan to succeed as the heir to the company. He apologized for his miss demeanor and promised that he would end hereditary transfer of control And leadership, promising not to pass the management rights he inherited from his father to his children. He also promised that the company would stop suppressing its employee’s rights to organize unions

It remains to be seen what the future holds for Samsung, and if Lee Jae-yong will stick to his promise of not giving control of Samsung to his children; in the meantime, Samsung still remains a brand to reckon with many contributions to the world of Electronic Devices.

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