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Obituary

Samsung chairman, who led tech giant’s leapfrog to global brand, dies, aged 78

By Oct 25, 2020 (Gmt+09:00)

3 Min read

Lee Kun-hee led the Samsung Group between 1987 and 2013
Lee Kun-hee led the Samsung Group between 1987 and 2013

Lee Kun-hee, chairman of the world’s top smartphone and TV manufacturer Samsung Group, passed away on Oct. 25 at the age of 78, the South Korean conglomerate said.

He took the helm of the electronics-to-insurance giant at the age of 45 in 1987, shortly after his father and the group founder Lee Byung-chul died.

The youngest son and fifth child of the late founder spearheaded Samsung’s transformation from a globally ridiculed phone maker to beat out Sony Corp. in the late 1990s and Apple Inc. in the early 2000s.

During his 26-year tenure as chairman until 2013, Samsung Group expanded by more than 20 times with 390 trillion won ($346 billion) in sales to become a global brand in smartphones, memory chips and TV markets.

The number of Samsung employees more than quadrupled to 400,000 during the period in business areas stretching from shipbuilding, life sciences, apartment building construction and credit cards to asset management.

Under his leadership, the group's market capitalization swelled by more than 300 times to top 300 trillion won. Currently, the market value of Samsung Group's listed companies is 550 trillion won, or 38% of South Korea's total market capitalization, with Samsung Electronics alone valued at 360 trillion won.

Since he was hospitalized following a heart attack in 2014, Jay Y. Lee, his only son and executive vice chairman of Samsung Electronics Co., has been leading the conglomerate as acting chief.

QUALITY MANAGEMENT

In 1983 as then-vice chairman, Lee ponyed up his personal money to fund the group's foray into the memory chip business, after persuading his father who had opposed the entry into the sophisticated technology market. Samsung became the world's No.1 memory chipmaker in 1993.

In 1993, he unveiled his New Management initiative in Frankfurt, announcing the group's switch of focus to quality from quantity, to go from being a follower in the digital and mobile era to emerge as a global leader.

Lee Kun-hee lays out Samsung's New Management initiative in Frankfurt in 1993 (Courtesy of Samsung Group)
Lee Kun-hee lays out Samsung's New Management initiative in Frankfurt in 1993 (Courtesy of Samsung Group)

Under the initiative, the group brought forward working hours by two hours from 7 a.m. to 4 p.m and introduced a line-stop system, whereby the entire production line would be halted to find the cause of a product defect.    

Further, Samsung abolished academic qualifications for new hires and introduced the annual salary system instead of the seniority-based pay system to attract top talent from around the world.

After the defect rate of Samsung's mobile telephones rose to 11.87% in 1994, the company collected 150,000 defective mobile phones and had 10 employees hammer them and then throw the broken pieces into the fire. This was in 1995, and he wanted to drive home the point that defects would not be tolerated. At the time, in 1995, in urged Samsung executives to upgrade the quality of their mobile phones, saying: "We will live in an era when everyone will eventually have one mobile device." 

Samsung climbed to the top position in the country’s mobile phone market in 1995 with a 19% market share, from fourth place in 1994.

Lee Kun-hee visiting one of Samsung's semiconductor factories in 2004
Lee Kun-hee visiting one of Samsung's semiconductor factories in 2004


Since 2003, Samsung has adopted convergence, design and digital as major product themes with heavy investment in them, which led to the roll-out of the high-end mobile devices of the Galaxy S series.

SETBACKS

Following the 1997-98 Asian financial crisis, Lee was forced to pull out of his cherished but financially troubled automobile business. To cover part of the ailing carmaker's losses, Lee donated his personal wealth of 2.8 trillion won and sold it to France's Renault in 2000.

He was twice convicted of criminal offences, including bribery and stepped down from his management positions of the group in 2008. After granted a pardon, he resumed the group's chairmanship in March 2010.

Write to Hyung-suk Song, Jung-Soo Hwang and Su-bin Lee at click@hankyung.com
Yeonhee Kim edited this article.

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