Lessons from history

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Lessons from history

A simmering row over history textbooks and Samsung Electronics’ first decline in quarterly operating profit in two years made headline news last week. The conservative Saenuri Party proposed the government author history textbooks used in middle schools and high schools and have a greater say in history education after a controversial boycott by liberals of an authorized textbook accused of being pro-Japanese and pro-dictatorship. On the economic front, the media was hyping up worries about Samsung Electronics’ future because of the company’s importance to the Korean economy. I looked back on some newspaper clips from the past. The economy has as much of a place in our history as politics does.

The birth of Samsung Electronics was not a universally blessed one. An article in the Dong-A Ilbo on June 26, 1969, reported that 59 local electronics companies had petitioned against Samsung Group joining up with Sanyo Electric to create an electronics unit. They labeled the chaebol’s electronics company as a Trojan horse for Japanese capital, discounting the company’s pledge to export 85 percent of its products. They also claimed that when the remaining 15 percent of its products were sold through the chaebol network, existing domestic electronics companies would all go bankrupt.

The uproar caused a major headache for then-minister of commerce and industry, Kim Chung-yum. On July 7, he announced that the government would license the creation of the joint venture on the condition that it exported all of its output. He could not calm local jitters that once a Japanese electronics company made inroads through a joint venture, the country wouldn’t be able to stave off forays by electronics majors like Matsushita and Sony. Samsung Electronics finally won its license to do business after it pledged to sell all of its output overseas.

Samsung Electronics was born but in a very fragile state. The logic that it needed Japanese money but not its products couldn’t persuade its partner. The initial investment of $19 million was scaled down to $3 million. The Japanese company didn’t like the condition of exporting all the company’s products. Samsung Electronics, however, was shrewd. It teamed up with a domestic electronics company to sell some of the products under the latter’s brand. The Maeil Economic Newspaper on Dec. 29 reported that Samsung Electronics signed an OEM contract with Orion Electronic Company for sales at home. “If it acquires Orion, the company could sell some appliances at home,” the report said.

The final impetus came from President Park Chung Hee. Chairing an exports promotion meeting on Aug. 24, 1970, Park asked his industry minister why exports of electronics that year were sluggish. The Maeil Economic Newspaper on Sept. 1 reported that the government changed its policy on joint ventures, which were required to sell all of their output overseas, by allowing local sales to a limited extent. The government targeted electronics exports of $80 million that year, but shipments fell short at $22.72 million in the first half. Domestic manufacturers preferred to sell electronics appliances at home rather than overseas because their products sold much more cheaply abroad, according to the report. Following President Park’s order, exports of electronics jumped more than seven times to $544 million five years later.

How much has our society changed since then? Suspicions about the chaebol, foreign capital and free competition have only grown. Could a chaebol group like Samsung create an electronics unit in today’s world? The owner would have been summoned to a National Assembly hearing and bombarded with accusations of being a greedy predator. A foreign investment promotion act that proposed to lower the 100 percent stake ownership requirement in an affiliated unit of a holding company to 50 percent in order to facilitate joint ventures with foreign companies faced a strong backlash from the opposition, which accused the government and legislature of giving into lobbying by certain chaebol groups.

Samsung Electronics sold 85 percent of its goods abroad last year. It has fulfilled its birth promise 44 years later. Today’s glory can be attributed to Samsung Group founder Lee Byung-chul’s entrepreneurship and President Park’s resolve on deregulation. What would our markets have become if competition and opening up to the world had been snubbed? Big companies would have continued to rake in profits from their monopoly statuses. Consumers would have been ripped off. These are the lessons we should teach our children.

Historian E. H. Carr said history was “a dialogue between the past and the present,” a way to better understand today’s world. Arnold Toynbee described history as a “challenge and response.” News articles of the past can give us guidance to the future. Who is on the right side of history? Railway unions and doctors who oppose any deregulation? President Park Geun-hye and her efforts to slash red tape? We must first define conservative, liberal, reformist and traditionalist before doing something about history textbooks.
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