From dried fish to folding smartphones
Synonymous with being the height of hi-tech and sleek design, it’s hard to believe Samsung was once a one-man grocery store trading local produce in South Korea. During its journey to becoming the world’s second largest tech company, boasting a profit of $41 billion (£32.5bn) in 2018, it has faced trials, accusations and setbacks. This is the incredible story of Samsung, from its humble import-export beginnings to global tech domination and its latest ‘folding’ smartphone.
A modest start
Samsung was founded in 1938 by Lee Byung-Chull, a local businessman who opened a grocery trading store in Daegu, South Korea. The store traded noodles, dried fish, fruit and vegetables and other local produce in and around the city and exported the goods to China.
Following the Korean War in the early 1950s, Byung-Chull expanded the grocery trading business into textiles, opening the largest woolen mill in Korea. At the time, Korea was one of the poorest countries in the world and Byung-Chull helped redevelop his nation’s economy by focusing heavily on industrialization.
However, it wasn’t until 1969 that Samsung entered the electronics industry, opening electronic focused divisions within the company. One of its first electronic goods were black and white televisions (like the one pictured), which it first began exporting to Panama in 1971. By the mid1970s, Samsung made washing machines and fridges, before creating – and mass producing – color TVs, while continuing its black and white models.
Leading the way with memory chips
In 1974 Samsung Electronics acquired Han kook Semiconductor, a move which saw the company become the market leader in memory chips in the early 1990s and retain its position as the world’s leading manufacturer of semiconductors. Today, even most Apple i Phones, the archival of Samsung’s Galaxy phones, use Samsung memory chips.
Exporting electronics abroad
The 1970s was a pivotal decade for Samsung. It started to export home electronic products abroad, and by 1978 it had produced four million black and white TVs – the most in the world at the time. That same year, Samsung opened its first overseas office in the US, and exported its first VCRs to America in 1984. Around that time the company changed its name to Samsung Electronics Co Ltd and sales exceeded 1 trillion won, the equivalent of 3.4 trillion won today (US$3bn/£2.3bn).
“Change everything except your wife and children”
Fed up with the reputation of making poor quality goods, in 1993 Kun-Hee famously told his employees to “change everything except your wife and children”. Subsequently the company underwent a major transformation, rebranding and reinventing itself as a major player in the manufacturing of quality tech. But two years later, he made the headlines again…
The legendary phone funeral furnace
Just like its earlier electrical goods, Samsung’s first mobile phone models were riddled with defects. A pivotal moment in the company’s history came when Kun-Hee visited the phone manufacturing plant and demanded staff set the 100,000–150,000 phones in production alight on the factory floor.
A necessary reinvention
Following the butchering of its shambolic phones, the reinvention of the Samsung brand was hailed as a “textbook case of successful rebranding strategy”.
Heading the mobile phone movement
Unsurprisingly, a major part of that highly successful rebranding strategy saw Samsung actually make better mobile phones. In 1999, it launched the world’s first MP3 mobile phone. While Nokia dominated the mobile phone market during the 1990s, Samsung continued to make innovations to handsets. By 2002, Samsung’s SGH T100, the first mobile phone to use a thinfilm transistor active matrix LCD display, was one of the best-selling phones, selling 12 million handsets worldwide.
Heading the digital revolution
As well as burning defect-heavy stock, one of Kun-Hee’s most inspired decisions was to adopt to a digital programme at a time (the mid-1990s) when the digital revolution had barely got off the ground. By refusing to follow in the analogue footsteps of the US at the time, Samsung targeted an area where it didn’t have to play catch-up. So, in 1998, Samsung created the world’s first digital TV.
Beset with corporate scandals
Samsung’s rapid expansion in the 1990s was not without its controversies though, as multiple bribery cases and patent infringement suits afflicted the company, although they seemed to do little to stifle Samsung’s growth.
A “heightened sense of crisis”
In 1997 Kun-Hee famously wrote that a “heightened sense of crisis” was required for any company to succeed, warning about the risks of complacency. That same year a journalist published recordings of Samsung’s vice-chairman Lee Hak-Soo (pictured center) talking about funneling approximately $3 million (£2.3m) to South Korean presidential candidates and linking Samsung with the bribery of senior prosecutors.
Number one TV producer
Meanwhile, on the goods front, the 2000s saw Samsung develop new technologies for the TV industry, designed to improve viewing experiences for customers. In 2007 Samsung enjoyed global sales surpassing $100 billion (£78.3bn) and by the end of 2008 it was the world’s number one TV producer, which was a far cry from its former reputation for making slapdash black and white TVs.
Lee Kun-Hee resigns
That same year (2008), after being found guilty of tax evasion and embezzlement, according to Reuters, Kun-Hee (pictured center) resigned from Samsung. Kun-Hee was let off lightly, receiving a suspended three-year sentence and fined just $100 million (£78.3m) – relative chickenfeed for a man of his wealth.
The birth of Samsung Galaxy
However, Samsung’s dominance as a global electronics powerhouse continued. In 2009 Samsung released its first Android-powered device – a smartphone known as the Samsung Galaxy i7500 (pictured). The phone was not without its faults, with original Galaxy users criticizing Samsung for the phone’s lack of firmware updates.
Success with Galaxy S
Samsung’s first Android smartphone to enjoy mainstream commercial success was the Galaxy S, which was launched just nine months after the original Galaxy. The phone went on to sell more than 25 million units.
Lee Kun-Hee returns to the helm
Adding a dramatic twist to the tale, Kun-Hee was pardoned by South Korea’s president Lee Myung-bak. Having received a special amnesty, Samsung’s former chairman returned to helm the company after a two-year absence. His return came after Samsung made record sales in 2009.
Boosting South Korea’s Winter Olympics efforts
Kun-Hee’s pardon is believed to have been made to allow the billionaire business tycoon, who is a member of the International Olympic Committee, to boost South Korea’s efforts to host the Winter Olympics. It might have worked because, in 2011, it was announced South Korea would host the 2018 Winter Olympics.
As Galaxy smartphones started to sell like hotcakes and the company’s disgraced chairman returned to the helm, a book named Think Samsung was published in 2010, written by Samsung’s former chief legal counsel Kim Yong-chul. The book made sensational claims about Kun-Hee’s corruption, claiming he stole around $10 billion (£7.8bn) from Samsung subsidiaries, bribed government officials and destroyed evidence.
South Korea maintains loyalty for Samsung
Despite the allegations reported in the book, most of South Korea’s mainstream media refused to run the scandal, seeing an attack on Samsung as an attack on South Korea itself.
Galaxy Tab gets off to a bad start
Samsung continued to do what it does best, focus on new products. Eager to compete with
Apple’s new iPad, in 2010 Samsung launched the Galaxy Tab. Labelled an “oversize smartphone in ill-fitting clothes”, using Android 2.2 with no tablet optimization, the Galaxy Tab didn’t get off to a good start.
Smartphone patent wars
In spring 2011 Apple began to litigate against Samsung in patent infringement suits around the design of Samsung’s smartphones. By October, the two tech giants were embroiled in 19 ongoing cases in 10 countries.
US court rules in Apple’s favor
The protracted legal disputes between Samsung and Apple were eventually put to bed. In 2012 a US court ruled that Samsung had infringed copyright of the design of Apple’s iPhone, and Apple was awarded $548.2 million (£426m) three years later. However, in a fresh twist in 2016, the supreme court sided with Samsung, who had been seeking to pare back $399 million (£310.4m) of its previous debt, as reported by The Guardian.
Samsung ranked bigger than Apple
Despite the damning copyright infringement ruling, in 2013 Samsung was named as the world’s largest tech company by the annual Fortune 500 list, which ranks the world’s largest corporations by revenue. Samsung was placed five notches above rival Apple, reporting revenues of $178.6 billion (£140bn) and profits of $20.6 billion (£16bn).
Galaxy Note 7 fire fiasco
Further setbacks awaited the South Korean tech giant when, in 2016, the company permanently ceased production of its high-end Galaxy Note 7 smartphones following reports of the phones catching fire due to faults with their batteries. The recall is said to have cost Samsung $5.3 billion (£4bn) and proved hugely damaging for the company’s reputation.
World’s 15th largest company
Despite being laden with controversy, scandal and setbacks along the years, Samsung is now the 15th largest company in the world, taking $225 billion (£176bn) in sales, $41 billion (£32bn) in profit, $293 billion (£230bn) in assets and a market cap of $326 billion (£255bn) in 2018 – not bad for a one-man dried fish-selling start-up