In the third quarter of 2024, Samsung was the only one of the top five global smartphone makers that experienced a fall in shipments. Its global market share fell from 20% to 18% year on year, and analysts estimate Samsung’s smartphone division’s operating profits dropped by 30% in the same time period. The South Korean Economy and Finance Minister Choi Sang-mok made no bones of the country’s dependence on the company. He said: “I think the Samsung crisis is a crisis for the Korean industry that we always worry about. [Korea] has made leaps forward based on crises, so I think we will be able to do so again.”
This might seem a little bizarre — why would a government minister comment on the fate of a single company? But to close observers of South Korea, this was no surprise. In his 2020 book Samsung Rising, journalist Geoffrey Cain illustrates just how much the South Korean economy depended on Samsung. Cain quotes research conducted by Sangin Park, an economics professor at Seoul National University:
“According to crisis simulations I have carried out, if Electronics stocks fall by 70%, both Samsung Insurance and Samsung C&T will become bankrupt. It is an inevitable domino game. If Samsung Life Insurance and Samsung Fire Insurance become bankrupt, the entire insurance industry in South Korea goes into crisis. If employees at Samsung Group and all its supplier firms (whose exact number is unknown to the public) lose their jobs, the unemployment rate in the country is estimated to rise by 7.1%. (Its current rate is 3.5%.) If the Samsung Group were to fall, [Park] goes on, the country’s National Pension Service, a major shareholder, would lose an estimated 19 trillion won (about $16.7 billion) in investment. And corporate taxes would decrease by an estimated 4 trillion won (about $3.5 billion). If the entire Group falls, and with it, multitudes of suppliers that depend solely on Samsung, South Korea’s biggest banks are at risk of insolvency. It is a startling admission. South Koreans refer to it as the ‘Samsung risk.’” [emphasis supplied]
This level of interdependence between a nation’s economy and a single, private company is both startling and unusual. Imagine if the United States’s entire economy depended on the fate of Apple, or — god forbid — Lehman Brothers. The very thought is absurd. So how did Samsung end up in this position? How did South Korea come to be dominated by a single company?
The story of the ‘Samsung risk’ starts with a man named Lee Byung-chul, the founder and chairman of Samsung. B.C. Lee, as he is so often called, created the company we now know as Samsung in 1938. He dies in 1987. This is the tale of those four decades.
B.C. Lee was born to an upper-class family in Uiryeong, a rural town in South Korea. He studied economics at the prestigious Waseda University in Tokyo, until an illness forced him to drop out and return home. Lee came back to a changed country: the Japanese had occupied South Korea in their bid to unify Asia. Koreans were forced to revere the Japanese emperor, worship at Japanese shr ...
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