[WHY] Koreans' love-hate relationship with Samsung

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Published: 25 Jun. 2022, 09:43 Updated: 26 Jun. 2022, 15:46

[WHY] Koreans' love-hate relationship with Samsung

The Taegeukgi, or Korean national flag, and the Samsung Electronics flag fly outside the company’s office in Seocho District, southern Seoul. [JOINT PRESS CORPS]

Comments on a recent YouTube video featuring Samsung Electronics Vice Chairman Lee Jae-yong conjure up thoughts of comment sections under popular K-pop music videos.

With over 10,000 comments, many flocked to praise Lee for welcoming U.S. President Joe Biden during his visit to Korea in fluent English, calling the 54-year-old businessman the “pride of Korea” and “a true patriot.”

But in another alley, called the civic group community, Lee, son of late Samsung Electronics Chairman Lee Kun-hee, is labelled an aggressor, disrupting the country’s order and legal system due to his history of violating the law.

Samsung Electronics Vice Chairman Lee Jae-yong shakes hands with U.S. President Joe Biden on May 20 at the company's chip plant in Pyeongtaek, Gyeonggi. [YONHAP]

The contrasting views over just one person encapsulate the mixed emotions that Koreans have toward the country’s largest company, which could be best summarized as a love-hate relationship.

If you ask a Korean about their thoughts on Samsung, you likely won't get a crystal clear answer because Samsung’s path to becoming the world’s leading tech manufacturer came with both fair successes and shady mishandling.

On one hand, Samsung Electronics is widely recognized in Korea for having played an integral role in the country’s dramatic transformation from a war-torn nation into the world’s 10th largest economy by gross domestic product.

The tech giant’s annual net profit accounted for 18.2 percent of the entire net by all listed companies last year, while its market capitalization took up 22 percent on the main Kospi bourse in May, according to the Korea Financial Investment Association.

Over 5 million Korean people, roughly a tenth of the population, own some amount of Samsung Electronics stock, meaning the moves and performance of the company matter not only to those in the business circle but also to the average person on the street.

At the same time, the founding family of Samsung, including the vice chairman, has long been the subject of criticism for their involvement in a wide range of crimes including tax evasion, breach of trust and bribery.

The cases are entangled within the shadows of Korean corporate culture, shaped by cozy relations with the government and companies, cronyism and an immature law enforcement system, often considered a byproduct of rapid economic development driven by aggressive state-led projects and interventions.

What are Koreans' general thoughts toward Samsung?

Reliable data covering the Korean public’s perception toward Samsung is few and far between, but a set of archived surveys offer meaningful insights.

Realmeter, a leading public opinion research firm based in Seoul, conducted a survey of 1,000 people in 2020 after the death of Lee Kun-hee, the youngest son of Samsung founder Lee Byung-chull and a business magnate credited with turning Samsung into the world’s leader in chips, smartphones and appliances.

Late Samsung Electronics Chairman Lee Kun-hee writes a message commemorating the 30th anniversary of the company's entry into the semiconductor business in 2014. [NEWS1]

Asked to assess his achievement, 54.3 percent of the respondents answered that his legacy is “very great,” with another 30 percent answering “great.” Only 11.5 percent of people said that his achievement was not big.

As for his misconduct, 21.7 percent said that the wrongdoing was “very grave,” followed by 27.6 percent choosing “grave” and 43.2 percent saying his wrongdoing was not that serious.

The survey agency analyzed the results, explaining that the chairman’s achievement was recognized across all age groups and political ideologies, but when it comes to misconduct, those in their 30s and 40s and those who identified themselves as liberal tended to be more critical.

Lee Kun-hee was convicted of tax evasion and breach of trust in 2009 after he issued warrant bonds of Samsung SDS at lower-than-market price to his son and two daughters. He was also found guilty of running secret bank accounts to hide about 4.5 trillion won ($3.4 billion) that he inherited from his father Lee Byung-chull.

The Samsung chairman was granted a special pardon in 2009 after the court gave him a suspended jail term.

As an entity, Samsung Electronics has topped the rankings of the most admired companies in Korea. For young people fresh out of college, the company is considered to be one of the best companies to work for due to its high salaries and strong brand reputation.

How do Koreans feel about Lee Jae-yong?

After his father went into a coma following a heart attack in 2014, the younger Lee took over the leadership position. Koreans seem to have a positive view on the successor’s overall business management but take a more cautious stance when it comes to his trustworthiness, apparently due to his track record of bribery.

The vice chairman scored 94 out of 100 in a poll measuring his ability to come up with a corporate vision and strategy, in a survey of 1,000 people conducted by Brand Reputation Research Institute in March.

The scores fell a bit in other categories, recording 87 in trustworthiness and 88 in social responsibility as more respondents gave lukewarm answers to questions about Lee's honesty and ethical standards.

Samsung Electronics Vice Chairman Lee Jae-yong apologizes over his wrongdoings in 2020 during a press conference held at the company's office in southern Seoul. [JOONGANG PHOTO]

Vice Chairman Lee was convicted of bribing former President Park Geun-hye in exchange for favorable approval in a controversial merger between Samsung C&T and Cheil Industries, a deal widely considered to be part of a scheme to transfer power to the younger Lee.

He was sentenced to two years and six months in prison last January but released on parole last August as the government took into account “economic conditions” at home and abroad.

Some say such lenient measures are needed to ensure economic growth whereas others disagree with giving such soft penalties only for certain people.

Lee has been thrown into the center of the dispute again as people are divided on whether he should be pardoned, a step that wipes an offender's record clean and frees them of any remaining penalties.

Korea Society Opinion Institute, a public policy research and survey center, found last month that 68.8 percent of 1,012 respondents agreed to a pardon while 23.5 percent disapproved.

The support rate for Lee was far higher than that for politicians in jail including former President Lee Myung-bak.

Analysts deduced that favorable views toward the conglomerate or the chief stem from high-flying profits and their contribution toward national economic growth and employment, while the skepticism is linked with their practice of violating laws and putting first the interests of family members over those of the shareholders.

“The [Korean] markets recognize the benefits of family members leading the corporations and enhancing corporate value,” wrote Lee Chang-min and Choi Han-soo, researchers at the Economic Reform Research Institute, in a report.

“But at the same time, they also perceive that the unfair handling of illegal cases could generate a negative impact on corporate value,” the report read.

Korea has many big conglomerates, like Hyundai Motor, SK and LG. What's so special about Samsung?

There are two distinctive features that distinguish Samsung Electronics from other big players. The electronics maker holds the top global market position in various sectors including televisions, memory chips and smartphones while others inevitably rank lower. Although Hyundai Motor and LG Electronics are leading manufacturers, it is hard to say they claim an undisputed dominant position in the global markets.

And holding the top position means a lot to Koreans — especially for the older generations, who lived in an era characterized by economic backwater after the 1950-53 Korean War when the country's gross national income and other key economic metrics were lower than those of Ghana or Gabon.

This is the primary reason there are so many anecdotes about Koreans feeling proud or even touched when they see Korean advertisements or products outside of the country, because the success is synonymous with the country's transformation.

Another reason people connect national pride to Samsung is that Samsung Electronics has become the top player in sectors once dominated by Japanese tech companies like Sony, Panasonic and Toshiba. The Japanese colonial ruling gave Koreans a combined feeling of hatred and envy toward Japan, and the stellar performance by Japanese companies once seemed unbeatable.

But as Samsung Electronics outsold Sony’s televisions or Toshiba’s chips entering into the 1990s through 2000s, the company became the symbol of success and the economic miracle of the country.

"Japanese companies were not just industry rivals, but an enemy to conquer," according to a book released in 2002 titled "Samsung Rising," authored by a group of Korean reporters.

What kind of role does the public expect Samsung to play?

With the outsized influence of the company, Koreans in general and possibly even the government expect the company to become a sort of “problem solver” in many areas not directly related to its business.

When the country is hit by natural disasters, such as the pandemic, Samsung Electronics is typically the first company to make a donation, often with the highest amount, prompting other companies to follow suit. When Covid-19 broke out in 2020 and there was a shortage of masks, the company dispatched its engineers to local mask manufacturers to help enhance companies' manufacturing techniques.

An engineer from Samsung Electronics instructs workers at a local facial mask manufacturer on how to improve production capacity. [YONHAP]

Vice Chairman Lee also met with the executives of biotech company Moderna to discuss the supply and contract manufacturing of Covid-19 vaccines in Korea.

Those activities also invited mixed reactions. Some say it was all worthy of praise and recognition, but critics maintain that the company’s social contribution is not something to be appreciated because of its history of receiving political favors. A source from a Korean conglomerate said that the activities also benefit Samsung Electronics' business, leaving doubt as to whether helping others was the genuine intent.

How is Samsung working to improve its image?

Given that many financial crimes committed by the Lee family were engineered to transfer control over to Lee Jae-yong, the vice chairman vowed to not hand over managerial power to his son or daughter.

In a public mea culpa in 2020, Lee admitted to misconduct.

“Samsung has grown to become a top-tier company on the global stage,” Lee said, “But we sometimes failed to meet public expectations since [Samsung] didn’t strictly follow the law and ethical standards. […] This is my fault. I apologize.”

Another notable move was establishing a committee in 2020 consisting of outside legal panels to monitor the company’s compliance with the law, after the bribery scandal under the Park Geun-hye administration.

The committee oversees the compliance at Samsung’s affiliates with Lee Chan-hee, former head of the Korean Bar Association, at the helm.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]

korea joongAng daily

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[WHY] Koreans' love-hate relationship with Samsung

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