How the Korean War Created Samsung

Samsung, one of the leading tech companies
in the world. Unlike some of its American competitors like
Apple or Dell—Samsung wasn’t formed in someone’s garage or a college dorm room. No, Samsung emerged in the wake of the most
destructive war in Korean history and in this video we’ll see how all of that carnage
paved the way for Samsung’s global domination. This video is brought to you by Skillshare,
where you can watch my two classes on how the stock market works. The first half of the twentieth century was
not very kind to Korea, to say it mildly. After a hundred years of political interference,
the Japanese Empire had reduced Korea to merely a puppet state, formally annexing it in 1910. As you can imagine, the Japanese occupation
was brutal, with many Korean farmers and businessmen being driven off of their lands and out of
their factories. As an ambitious colonial power, Japan was
eager to settle Korea with its own people, which is why Japanese ownership of Korean
land, for example, skyrocketed from 8% in 1910 to over 50% just twenty years later. For a time, it seemed as if the Korean nation
was destined for oblivion, for the Japanese not only forced the Koreans to change their
names, they also prohibited schools from even teaching the language. It took the crushing Japanese defeat during
the Second World War for Korea to become independent once again and in 1945, despite the chaos
of American and Soviet military administration, the people of Korea were cautiously optimistic. One such optimist was Lee Byung-Chul, who
was one of the few Koreans lucky enough to have started their own business during the
Japanese occupation. He had created a small transportation company
in 1938 called Samsung, which specialized in exporting groceries. From the very start, Samsung had a very big
competitive advantage: it was located in Masan, a city on the southeastern coast that the
Japanese were using as their biggest exit port from which they transported all the exploited
Korean resources. Now, Lee wasn’t a true collaborationist,
but his usefulness to the regime granted him many favors that weren’t available to most
Koreans, like getting loans from Japanese banks. While Samsung’s Japanese period was decent
for its time, the newly-independent South Korea presented immense opportunities for
Lee. The years immediately after the liberation
were very profitable for pretty much every Korean businessman for a simple reason: while
the Japanese administrators were gone, their assets remained and the Korean government
was handing them out left and right for cents on the dollar in an effort to rebuild the
country. Everything looked great for Samsung, but then
the Korean War broke out. North Korea’s invasion quickly turned into
a proxy war between the Soviet Bloc and the Capitalist West, with modern weapons devastating
major cities and industrial centers in South Korea. Most of Korea’s factories were damaged during
the three long years of war; for example, over 60% of textile and chemical facilities
were outright destroyed, as was half of the country’s rail. At the end of the war— Korea’s infrastructure
was in desperate need of repair, and its companies were too young to sustain its economy, which
was honestly on its last legs. Prices rose dramatically, as the South Korean
government was forced to print more money to finance the country’s vast military expenditures. Hyperinflation was so extreme that in July
1953, Korea’s money in circulation was 24 times greater than just three years earlier. The future of South Korea and Samsung by extension
was looking increasingly uncertain, but luckily for them, Uncle Sam had their back. After the war, the US created essentially
the Korean version of the Marshall Plan, with the United Nations following suit soon after. Throughout the 1950s, three billion dollars
were sent to the Korean government, which then chose medium and large companies worthy
of the investment. Samsung was among the companies to benefit
from this relief aid, no doubt thanks to Lee’s close friendship with the first South Korean
President. In fact, the extent of state help that Samsung
received during his tenure was mind-boggling. While usually imposing very strict limits
on exports, the government essentially gave Samsung a free pass, allowing it to become
the biggest exporter of scrap iron, for example, after the war. Funneling American relief money into Samsung
allowed it to expand beyond simple transport and into actual manufacturing: in 1953 they
started making sugar and flour, and then textiles a year later. Buying ruined factories with American money
and then rebuilding them was such a lucrative business that Samsung grew at an average of
93% annually during the 1950s. However, relief aid was only part of the picture:
the Korean government was also extending generous credit to Samsung at very competitive rates. Lee was one of the biggest beneficiaries of
government lending through government associated banks, and what’s really hilarious is that
once he got the money, he turned around and started buying those very same banks. By the end of the decade, Samsung had taken
over three of the banks associated with his friend’s regime and was also branching out
into insurance and chemicals. Samsung had grown so large that not even a
revolution could bring it down; thus, when the military overthrew his friend’s regime
in 1961, Lee was probably not too worried. Under the new administration, the Korean economy
opened up and focused on massive export growth, for which Samsung was perfectly positioned
after a decade of state-funded preparation. Thus, despite a second regime change in the
span of 15 years, Lee was once again in the good graces of the Korean government. The most popular Samsung division we know
today was, of course, also created with government aid: in 1969 the government passed legislation
reducing taxes by 50% on companies operating in the electronics business, which at the
time was pretty much only Samsung Electronics, which was created the very same year. During the 70s Samsung became a symbol of
Korean modernization as it helped bring televisions and washing machines to the home of every
family, and from then on the jump into semiconductors and more recently smartphones seems only natural. Of course, none of this would’ve been possible
without Lee’s brilliant positioning close to whichever political power held sway during
his time and even today Samsung and the government go hand in hand. Luckily for you, Samsung is a public company,
or at least its biggest division is, so you can readily profit off of the close relationship
Lee forged many decades ago. If you’d like to learn how to capitalize
on this on the stock market, you’ll probably enjoy the two investment courses I have on
Skillshare. If you’re not familiar with Skillshare,
it’s the largest online learning platform on the planet, with thousands of courses on
topics like productivity, motion graphics, music production and a bunch of other fascinating
topics. You can watch all these classes and my own
for free right now if you register for a free trial of Skillshare using the link in the
description. Now, once you’ve signed up there you should
also follow me on Instagram to watch the awesome teasers I post for every upcoming video. We’re gonna hear each again in two weeks,
and until then: stay smart.

  1. 0:34 that photo shows Chinese, NOT Korean. They are wearing Chinese (well, actually Manchurian) Costumes.
    4:24 Samsung's Lee and President Rhee are actually same surname, with the same Chinese character. read the same way in Korean too.
    Just transliterated differently into English, for some odd reason.

  2. And then the books and motivational speakers say hardwork gives you shit
    While you can clearly see how lucky Samsung was

  3. Well you should add SAMSUNg ass heavy industries as well because they produce ship. And also they have arms division to produce tanks and heavy artilery.

  4. i amazed how fast South korea developed. In the korean war Nepal supplied foods, clothes to south korea. AND look now at Nepal . Still underdeveloped Government Unstable politics. Wish we can get leaders and politicians like south korean

  5. "Power is a lot like a real estate. It's all about location, location, location. The closer you are to the source, the higher your property value."

  6. This channel has been slacking off, too busy promoting skillshare courses…
    You emphasize all the war stuff but you didn't mention they also build military weapons, tanks, etc…Samsung Techwin.

  7. I know Samsung was a result of the Korean war. In fact, Samsung Note can double as an expensive grenade in case of a war.

  8. Much more detailed than that coldfusion video that copy pasted from wikipedia.

    However, there are still some clear bias that is perhaps inevitable from a foreigner's perspective. The photos used to depict pre-modern Korea in this video are some of the most unflattering, savage-like images- the same pictures used by right-wing Japanese groups to justify the occupation and 'civilizing' of Korea.

    Nevertheless, it is a plus that this video even mentioned the brutal nature of the occupation at all, while in most other cases it glosses over the whole 35 year occupation period with a single sentence, or worse, parrot the right wing Japanese narrative that cultural genocide and raw exploitation was 'beneficial' to Korea. (If you didn't know, there are Japanese language videos on youtube with millions of views, that justify and glorify Imperial Japan's actions.)

    Another point that seemed overly-emphasized is the US aid. Sure, it is noteworthy that American funds helped support Samsung's endeavors, but there were also funds from Japan after the 1965 normalisation of relations that is as significant, if not more than the initial US aid. Furthermore, it is much more interesting to focus on how brilliantly those limited funds were used grow non-existent industries (for example, how they beat out the Japanese behemoths in electronics despite even a collective effort by the Japanese companies to kill the Samsung competition by dumping), which were left out completely in this vid.

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