April 01, 2002 in Social Responsibility News

The Revenge Of the Nerds

April 1 issue - Good salary, vacation, benefits, and... babes, babes, babes- That wasn’t what Suh Kwang Young had in mind when he went to work at conservative Samsung in 1998. But nowadays when the young bachelor is introduced to a possible love interest, the first thing he does is fork over a business card. It never fails. “They seem to feel secure when they see the Samsung name and instantly give a grade of at least a B-plus,” says Suh. “They just assume I am a very industrious person.”


THESE ARE HEADY days for the famously fastidious nerds at South Korea’s new No. 1 company. Just a few years ago, if you wanted to be a cowboy of Korean commerce, there was only one place to go: Hyundai. The ranking of the top five chaebols, or conglomerates, in South Korea had remained essentially unchanged for decades. They were fixed stars in the booming economy, and Hyundai was the biggest and most macho, a burly industrial giant built on steel, autos and ships. In rank-obsessed South Korea, that meant prime tables at the best restaurants, priority listings with Seoul matchmakers and unsurpassed access to everything from bank loans to the presidential Blue House.


Then came the Asian financial crisis of 1997 and its aftershocks, which shuffled the Korean corporate hierarchy with dizzying speed. Last summer Hyundai dropped from the top spot on the ladder. No. 3 Daewoo vanished in a humiliating cloud of scandal. The only company to emerge stronger was Samsung, which became the No. 1 Korean company, with $53.7 billion in assets, mainly in techie fields like computer chips and flat-screen TVs. The nerds had risen to rule in Seoul.


With the boom years done, a new conservative ethos is in vogue in South Korea. In surveys, collegians pick Samsung as the company where they would most like to work, and name Samsung Group chairman Lee Kun Hee as the person they would most like to be. (Major-league baseball pitcher Park Chan Ho was second.) The Samsung name opens doors. Samsung manager Ha Joo Ho says he recently asked to move into his new house before making the final payment. The seller said “no way”?until Ha casually mentioned his Samsung ties. There are other benefits. Bank loans come easier. Credit? No problem.


Samsung admirers don’t keep their affections secret. In a recent survey of 500 single women by Duo, a matchmaking company, Samsung bachelors were rated the most desirable spouses in the country’s top five chaebols because they were “reasonable and disciplined.” They were also thought to be best at helping to raise kids and least likely to have extramarital affairs. “Samsung men are not only gentle and neat, but also reliable,” said Chang Sung Yun, a 27-year-old event organizer who once dated a Samsung man. “Like their company, they are the elite of our society.”


To an extent, this has always been so. With a rep for being smart, sophisticated and impeccably dressed, Samsungites have long enjoyed a certain cachet, compared with the more earthy types at Hyundai or Daewoo. But Samsung was always a touch prissy, letting others do the heavy work of building Korea into a major industrial power. In the ’70s and ’80s Hyundai and Daewoo became global players in industries like steel and chemicals; Samsung kept its hands clean in electronics, finance and other services, including the Korean-language NEWSWEEK, until a few years ago. It steered clear of Korean money politics while the others became deeply involved, or even (in the case of Hyundai founder Chung Ju Yung) ran for president. To many Koreans, Samsung lacked the brash, brook-no-obstacles ego that had made their economy strong.


The Asian crisis shook everything up. Samsung was the only chaebol to quickly admit its debt problems and start scaling back. It even sold the chairman’s pet project, a new auto company, to a foreign firm, Renault. When President Kim Dae Jung later called on businessmen to invest in North Korea as part of his grand vision of a united Korea, Samsung refused to join this risky venture. Now Samsung’s appeal is seen as mainstream, even macho.


Its caution is cast as guile, the product of a corporate intelligence arm that some Korean analysts have compared to a spy agency. By collecting reams of data and analyzing it accurately, this argument goes, Samsung avoided the hubris and excess that helped undo Hyundai and others. Twelve of Korea’s top 30 chaebols have gone bankrupt since the ’97 crisis. The Hyundai Group saw many of its companies fail, and is expected to fall out of the top 10 companies when the 2002 list appears next month. A surviving unit, Hyundai Motor, could remain in the top five. But it is no longer a classic, rapidly expanding Korean conglomerate.


Samsung is. In finance, housing and many other services, Samsung is the new leader. Samsung Securities was not even among the top 10 brokerages until a few years ago, but now it’s the biggest, while Hyundai Securities struggles to survive. Hyundai was also displaced by Samsung as best in the Korean housing market last year. A new Samsung condo in Seoul recently drew a record 700 applicants for every unit. “A few years ago, we were afraid of competing with Hyundai,” says Kim Dong Woo, a Samsung housing manager. “But now we want Hyundai to be in competition because we know we can beat them.”


In egalitarian Korea, tycoons have never dared flash their wealth as they do elsewhere in Asia. So Samsung executives are careful not to crow too loudly and to cast their own rise in terms of national interests. “Our success shows chaebols are not necessarily bad despite all the talk about their responsibility for the financial crisis,” said Lee Soon Dong, a Samsung executive. “Chaebols still can lead Korea’s economic growth.” Today Samsung accounts for 28 percent of Korea’s stock-market capitalization, 16 percent of exports and 7 percent of tax payments, and it’s far from done. Samsung now models itself on General Electric, the American conglomerate that aims to be No. 1 or 2 in every market it enters. If Koreans have any doubts about Samsung now, it’s that the company may be getting too big.


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