Samsung is one of the world's largest makers of smartphones, televisions and memory chips. Yet when it was founded in 1938, its business was selling dried fish, vegetables and noodles. In Part 4 of How Global Giants Began, we look at how a small trading company in Korea became a global technology leader.
Lee Byung-chul's trading company
Lee Byung-chul came from a landowning family and had studied in Japan. After an earlier rice mill venture failed, he started a trading company in Daegu, Korea, in March 1938, with about 40 employees. He named it Samsung, meaning "three stars", representing something big, numerous and powerful that would last forever.
The company traded groceries, dried fish and noodles, exporting to Manchuria and Beijing. It also produced its own noodles.
Surviving war and rebuilding
The Korean War (1950 to 1953) destroyed much of Korea's economy, including Samsung's assets. Lee rebuilt with businesses that met basic needs in a war-torn country. In 1953 he founded a sugar refinery, Cheil Jedang, and in 1954 a woollen textile company, Cheil Industries. Both made products Korea had previously imported.
Over the next decade Samsung expanded into insurance, retail and other sectors, becoming one of Korea's large family-controlled business groups, known as chaebol.
Entering electronics
In 1969, Samsung Electronics was founded. At first it partnered with Japanese companies and made simple products such as black-and-white televisions. The company learned by manufacturing, steadily improving its skills and lowering costs.
The big bet on chips
In 1974, Samsung bought a stake in Korea Semiconductor, a struggling chipmaker, and later took full control. Many advisers thought it was foolish for a small country's company to compete with the US and Japan in high technology.
In 1983, Lee Byung-chul announced that Samsung would enter the memory chip business in earnest. Samsung built factories fast and developed its first 64K DRAM chip that same year. It invested heavily even during industry downturns, when competitors cut back. By the 1990s Samsung had become the world's leading memory chip maker, a position it has held for much of the time since.
Lee Kun-hee and the quality revolution
When Lee Byung-chul died in 1987, his son Lee Kun-hee became chairman. In 1993, after seeing Samsung products gathering dust in foreign shops and hearing about quality problems, he called senior executives to Frankfurt and launched the "New Management" initiative. His famous message was to "change everything except your wife and children."
He pushed the company to focus on quality over quantity. In a widely reported 1995 event, he had a large pile of defective phones and other devices publicly destroyed in front of employees to show that poor quality would not be tolerated.
Becoming a global brand
Through the 2000s, Samsung became a leader in flat-screen TVs, displays and later smartphones. Its Galaxy phones made it one of the world's top phone sellers. Samsung's strength comes from controlling many parts of its supply chain, including chips and screens, which it also sells to other companies.
Business lessons from Samsung
- Start with what the market needs. After the war, Samsung made basic goods Korea lacked.
- Learn, then lead. Partnerships and manufacturing experience built its skills.
- Invest through the cycle. Spending during downturns helped Samsung dominate memory chips.
- Quality is a strategy. The 1990s focus on quality transformed its brand.
- Vertical integration can be powerful when you can make critical parts yourself.
In Part 5, we visit a farm in Sweden where a teenager started a mail-order business that became IKEA.
How Global Giants Began: the full series
- Part 1: Coca-Cola
- Part 2: Toyota
- Part 3: LEGO
- Part 4: Samsung (you are here)
- Part 5: IKEA
- Part 6: McDonald's
- Part 7: Nike
- Part 8: Apple
- Part 9: Amazon
- Part 10: Google
Dates, prices and figures are commonly cited historical values and may vary slightly between sources. Company names and trademarks belong to their respective owners; HorizonDesk is not affiliated with any company mentioned.
