Samsung began in 1938 as a small Trading Company that sold noodles dried fish and local vegetables back then it was impossible to imagine that Samsung would transform into one of the world's most valuable companies that produces so much more than you would think Samsung have created skyscrapers roads hospitals clothes robots and far far more they even had an aerospace division that created helicopters and tanks for the military but we'll get to all that first let's introduce young chel who founded Samsung at the age of just 28 he says that one night he had a panicked
realization that he was wasting his life and that it was time to set a clear goal for himself and so he committed at that moment to building a business despite Samsung's humble beginnings selling groceries Lee always had a much bigger Vision he chose the name Samsung as in Korean it means three stars whil as many of us three stars may sound like a mediocre product review in Korea the number three is very popular as it represents something big and powerful and star is used to represent something Everlasting big powerful and everlasting are certainly perfect words
to describe what Samsung has now become but at first it didn't look like Samsung was even going to survive as the Korean War had a devastating impact on Le's business and the entire country in fact after the war there was a shortage of Commodities and Korea was heavily relying on Imports so Lee decided to diversify his business and create affordable Goods for the public he started by creating a sugar refiner and then using the profits from that he opened the largest Woolen Mill in the country this allowed Samsung to expand into textiles and they began
creating finished products like clothing since it was diversification that allowed Samsung to survive Lee decided to keep pursuing this strategy more aggressively and reinvested the money he made into other new areas like opening a department store and getting into the insurance business in fact to this day Samsung is the largest insurance provider in South Korea with all of this rapid expansion of his business it wasn't long before Lee was the richest man in the country and he was about to get a lot richer in 1968 Samsung Executives had a meeting where they decided the next
Market to enter Electronics a year later Samsung Electronics was fully set up and they created a 12-in black and white TV within a decade they'd become the world's number one black and white TV manufacturer thanks to their efficient assembly line production and this success LED them to start producing all kinds of Home Appliances like in 1979 they began making microwaves in 1980 they started producing air conditioners in 1981 they produced a million color TVs and in 1983 they got into making personal computers but they soon realized that to produce all of these electronic Goods they
were heavily reliant on importing so many small components from abroad so they bought a Semiconductor Company to have full control over the supply chain themselves they not only Ed these chips in their own products but started selling them globally to other electronics manufacturers opening yet another product line for Samsung in fact one of their many customers is Apple who have used Samsung memory chips in their iPhones despite the fact the two companies have become Fierce rivals in the smartphone market which we'll get to shortly as well but what's really fascinating about Samsung is all the
industries they've expanded into that you never normally hear about for example under a division called Samsung heavy Industries Samsung specialized in making giant ships and are one of the largest mega ship builders in the world there's also another division called Samsung construction and trading that makes roads tunnels Bridges and buildings amazingly the world's tallest building the Burge Khalifa in Dubai was built by Samsung and before that Samsung was also involved in making the previous tallest building in the world they even own South Korea's largest theme park called everland have their own hotels and own a
place in Korea called Samsung town so whilst many of us probably know the Samsung brand from its success in Mobile phones and consumer monitors and gadgets that's barely the tip of the iceberg we haven't even mentioned Samsung's nonprofit Foundation which includes a university and a hospital called Samsung Medical Center yep Samsung even have a hospital however the fact that Samsung have expanded into so many Industries may sound like an incredible business success story a young entrepreneur starting with a simple idea and then diversifying into more and more markets and gradually building an empire but that
is certainly cly not the full story the real truth is much more controversial okay it's time for a very quick break while I ask you a favor if you're enjoying this video so far please turn on the notification Bell for magnates media I'm posting many movies about business money marketing and more but just subscribing doesn't always mean you'll see them so please consider turning on notifications and I'll love you forever [Music] following the Korean War South Korea was in a very bad State not producing or exporting many Goods the president was eager to expand the
economy and decided to support large Korean businesses by offering them very easy financing and protecting them from competition in other words Samsung and a couple of other big South Korean businesses got given extremely favorable loans special tax breaks and a bunch of other support measures from the government to help them expand the idea was that by helping these big companies grow a lot larger it would help the overall country's economy for example right after Samsung started working on electronics the South Korean government banned several other countries like Japan from selling Electronics in South Korea pushing
consumers towards Samsung products instead around this time the South Korean government also reduced taxes by 50% on companies operating in the electronics business but here's the thing Samsung was by far the biggest company in the industry at the time by a huge distance and so they benefited way more than anyone else in fact the government was essentially funneling American relief money that South Korea received after the war straight into Samsung and this is what allowed them to expand so rapidly and this was all thanks to Samsung's founder Lee and his ability to make very strategic
political connections like becoming good friends with South Korea's presidents as a result of this friendship Samsung continually got special treatments like they didn't have the same export limits other companies had there was also another incident where government Associated Banks started offering Lee extremely generous credit terms so that Samsung had more money to fund their expansion plans but when Lee got the money from these Banks he used some of that money to start buying those same Banks who had given him the credits now to be fair it's true that by the government helping Samsung so much
in many ways it helped the whole of South Korea's economy especially because Samsung employed huge amounts of people as it grew but the government's favorable treatment of Samsung often ended up hurting other smaller Korean businesses how could anyone compete with a government supported conglomerate with such vast resources and wealth Samsung could crush anyone they wanted when they entered a new market which meant that some viewed Lee as a symbol of corruption it could also be argued that by helping Samsung so much the South Korean economy is now over Reliance on one single company if things
go bad for Samsung it could have a terrible effect on the entire nation especially because Samsung is so heavily involved in so many different Industries in fact a study in 2014 found Samsung composed about 17% of the entire South Korean economy you see Samsung is one of South Korea's chaes a Korean term that refers to family-owned conglomerates that have built giant Empires through close government ties there were a few others like LG and Hyandai but Samsung is the largest and basically because these business Empires are kept within the family it means that just a few
families in South Korea hold a vast amount of the country's wealth power and influence so when Samsung's founder Liang cha died in 1987 his son lean he took over the business and this is where Samsung's ties to the government get even more controversial firstly in 1996 Leon he was charged with bribing a former president however because of Samsung's government connections the president at the time pardoned him with no further action taken then in 2008 lean he was accused of managing a political slush fund which was used to Bright prosecutors and politicians he was found guilty
of tax evasion and embezzlement to which he apologized and stepped down from the company but there was no jail time and within just 2 years the new South Korean president had pardoned him and Lee Khe went back to work as the chairman of Samsung as if nothing had happened so on two separate occasions leean he had been charged with bribery corruption and tax evasion and on both occasions he received no jail time and was pardoned of all wrongdoing despite the overwhelming evidence this just shows how tightly Samsung and the government are connected even when publicly
convicted of a crime the president can just reverse it and this goes even further in a controversial book entitled think Samsung written by Samsung's former Chief legal council it was alleged leean he stole around $9 billion from Samsung subsidiaries destroyed evidence and bribed government officials to guarantee his son would succeed him as the head of Samsung in addition several presidential candidates and AIDS have reportedly been given bribes by Samsung now Samsung denied some of these claims and most of South Korea's media refused to even mention this book because Samsung is such a huge part of
the country that an attack on Samsung can be perceived as an attack on South Korea itself plus it's very possible the media simply didn't want to get on Samsung's bad side given how powerful the company is for example in an article titled South Korea the Republic of Samsung the author suggested that Samsung's chairman is more powerful than the president of South Korea and that many Korean people have come to think of Samsung as invincible and above the law essentially the company has vast influence over the government media and entire country and just to make things
even more absurd when eventually Leon he's son took over after him he was also found guilty of embezzlement and bribing politicians just like his dad had been now I really want to stress that we're talking about the actions of a small number of individuals here Samsung is a giant conglomerate of hundreds of thousands of employees so it's obviously unfair to tarnish all of Samsung with the actions of just a couple of people plus clearly Samsung have done plenty of good in South Korea as well but I do think it's interesting that once you see the
kind of shady back room dealings and bribery that went on and the Deep ties to the government suddenly Samsung's success story isn't quite the fairy tale it may have seemed in chapter 1 however we're not quite done yet because no story of Samsung would be complete without us looking at one of the biggest disasters in Samsung's entire history before we get to the next chapter I want to tell you about our video sponsor public.com an investing platform that helps people be better investors with public you can build a portfolio of many different fractional assets from
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and you're struggling to breathe you look over and see that your Samsung Note 7 smartphone is on fire scenes like this played out multiple times around the world in 2016 an Airlines soon banned the phone from flights what's concerning is Samsung knew about several of these incidents and initially did nothing they were extremely slow to react and it was only as more phone explosions happened that the media picked up the story and Samsung was forced to stop production and recall the product this cost them over $5 billion not to mention all of the reputational damage
to make things even worse the initial replacement product Samsung issued also had the same overheating problem that's because Samsung initially blamed the battery as being the issue but actually it was more complex than that it wasn't down to just one faulty component that could easily be swapped out but instead linked to the internal design and the way the components in the device were basically crammed too closely together but in many ways the real root of the problem can be traced back to Samsung's ongoing battle with apple if we were back to 2011 Apple was suing
Samsung claiming they' basically copied the design of their iPhone demanding billions of dollars while Steve Jobs publicly called Samsung a copycat Samsung felt this was ridiculous given that apple had taken plenty of inspiration from competitive products themselves over the years but Samsung Executives were determined to create something new and change The Narrative of Samsung being followers instead of leaders and thus they launched their Galaxy Note series a cross between a tablet and a smartphone but for the Note 7 model Samsung Executives wanted to add in lots of new features and they also demanded tight deadlines
with very aggressive specifications Samsung Engineers recall that the pressure to make the device on time was extremely intense and that it became a chaotic rush to finish the product by the deadline they didn't realize it at the time but basically in the race to try and be Apple Samsung had rushed the products development too much they'd cram the Note 7 with too many features and not spent enough time on quality control of course before realizing the issues they sold millions of these dangerous phones all around the world and spent gigantic sums of money on marketing
it and as if this hadn't been a big enough PR disaster already Samsung then tried to suppress information about the whole thing for example when people on YouTube created parody videos in Grand Theft Auto with characters using Galaxy Note 7s as exploding grenades Samsung copyright strike the videos despite having absolutely no rights to do so this backfired further as their attempts at censorship created yet more buzz and controversy around the whole story however despite all of the drama both with their products and with their owners Samsung have clearly continued to have incredible success they've created
Innovative products like their folding phone they've generated more Revenue than companies like Google and Microsoft and they'll no doubt continue to keep entering all kinds of new markets given the very humble beginnings of how Samsung started it really is quite amazing what the company has now become and I guess it's proof that with enough hard work anyone can turn their small business into a giant Empire as long as you're good friends with the president of your country and they're willing to funnel you millions of dollars of taxpayer money now if you want to hear some
really controversial business stories I think you'll enjoy these videos right here just take your pick and hopefully I'll see you there thanks for watching this video to the end and supporting this channel you are a legend and I'll see you in the next one [Music]
