IPFS Menckens Ghost

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The Rest of the Story about S. Korea and the Coronavirus

Dear Thinker:

At first blush, it sure looks as if authoritarian governments (e.g., China), or former authoritarian ones (e.g., S. Korea), or former benevolent/authoritarian ones (e.g., Singapore) were able to flattened the coronavirus curve faster than Western governments.

It no doubt helps that their citizens are more obedient and less individualistic than Americans, due to their "rice" culture of working collectively and their Eastern religions of accepting what fate has dealt them.

You've probably learned from America's herd media that S. Korea controlled the spread of the coronavirus by quickly imposing quarantines, keeping tabs on the whereabouts of citizens, and rapidly releasing inventories of test kits, masks and gloves.  But you may not have heard about the corruption in S. Korea, where, as the book review below my signature details, more than half of the country's largest corporate groups are led by convicted criminals, including the current chairman of Samsung.

An aside from history:  When the Cold War sucked us into the Korean peninsula and the Korean War, Korea was extremely impoverished, backward and poorly educated.  And it was run by a dictator.  Now, thanks to the troops and money we've poured into the country, it is heavily industrialized with a strong export economy and an education system that, according to international tests, competes with Norway for the top spot.  In a real sense, we've sent them troops and they've sent us cars, electronics, and other goods.  It was a damn good deal—for them!

Cheers,

Mencken's Ghost

'Samsung Rising' Review: The Republic of Samsung

South Korea's most valuable company produces a ?fth of the country's exports and is intimately intertwined with the state.

By Thomas A. Bass

The Wall Street Journal, March 22, 2020 3:44 pm ET

Geoffrey Cain's "Samsung Rising" reads like a dynastic thriller, rolling through three generations of family intrigue, embezzlement, bribery, corruption, prostitution and other bad behavior that seems to pass for standard operating procedure in the Korean business world. More than half of the country's 10 largest corporate groups, Mr. Cain tells us, are led by convicted criminals, although all of them have received presidential pardons, and several of them, including Samsung's current chairman, Lee Kun-hee, have been pardoned twice.

The Korean national spy agency works with Samsung, Samsung works with the government, and everyone makes out well in the virtuous circle of cross-shareholding known as the Republic of Samsung. In the meantime, South Korea's most valuable company, a $300 billion behemoth that accounts for a fifth of the country's exports, keeps inventing new products that we gobble up by the millions.

"Samsung is the most bizarro place I've ever seen," says a former American executive at the company. Mr. Cain notes the irony that the most prominent company in South Korea is infused with the nationalism and militaristic structure of the North. The company is run by a revered leader whose messages are broadcast throughout its factories and reproduced in everything from comic books to a Samsung-owned newspaper. During the company's annual summer festival, Mr. Cain writes, drill teams line up to form a punching fist and raise placards spelling out the word "Victory"—just like their northern cousins do.

Like many stories about successful entrepreneurs, Samsung's begins with a young man dropping out of college. Lee Byung-chul, also known as B.C. Lee, founded Samsung in 1938, in what was then a Japanese colony. He failed at trading rice before moving into fresh vegetables and dried fish. As a university student in Tokyo, Lee had admired how the Japanese did business through zaibatsu—interconnected corporate cliques with strong ties to the military and state. Lee borrowed this structure to develop what became known in Korea as chaebols.

Lee drew on family resources to build a sugar refinery. He moved into trucking, wool spinning and insurance. He started a university and a newspaper. By the time he died in 1987, he was the richest man in South Korea and a "symbol of South Korean corruption," says Mr. Cain, for having bribed his way into obtaining a wide variety of state-controlled licenses and contracts.

In November 1983, Chairman Lee welcomed into one of his factories in Suwon, a grimy, industrial city south of Seoul, a 28-year-old American entrepreneur named Steve Jobs. Dreaming about building a tablet computer, Jobs was looking for memory chips and displays. Samsung at the time was making cut-rate TVs and microwaves, but it was also getting started in making memory chips, and Jobs suspected they could build anything he wanted. He and Lee hit it off, and Samsung would eventually become the major supplier of computer chips, displays and other components used in Apple's iPads and smartphones.

Before his death, Lee handed the company to his third son, Lee Kun-hee, or K.H. Lee. Lee Kun-hee was a playboy better known for having a private race track for his Porsches until one day in 1993 when he had a kind of corporate epiphany. Gathering the company's top executives into the presidential suite at the Kempinski Hotel in Frankfurt, where he was living at the time, Lee delivered an eight-hour speech and urged them to "change everything except your wife and children" and embrace Samsung's new philosophy of "perpetual crisis."

Samsung's "quasi-religious corporate culture," as Mr. Cain calls it, began opening to the West. Samsung imported Madison Avenue advertising executives, California designers and Texas marketers. It launched Hollywood initiatives to improve the company's dismal image. The company began shifting from electronics to software and lifestyle. In this world of interchangeable technology, where one cellphone works pretty much like any other, design becomes the product itself.

Samsung went through a dark period in the late 1990s. Asian markets collapsed in 1997, Samsung Motors went bust and Lee Kun-hee was convicted of making $32 million in "donations" to government officials. To bring in cash, Samsung began selling flip phones in bulk to Sprint and other carriers. This is when the sales and marketing people in Richardson, Texas, began attending corporate meetings that were "more like a Communist Party self-criticism session," as Mr. Cain puts it. The company was so driven by "fear of failure and loss of face" that good sales figures in the U.S. were thought to reflect badly on bosses back in Korea.

By 2010, the year before his death, Jobs was threatening "thermonuclear war" on Android, the operating system used by Samsung's phones. Furious that a major supplier was releasing its own competing products, Jobs launched one of the longest-running patent-infringement suits in corporate history, which ended seven years later in a legal draw, with Apple winning in the U.S. courts and Samsung winning in Korea, Japan and England.

By this point in the story, Mr. Cain's wonderfully informative book begins to fray into anecdotes about various product launches and celebrities pouting over promotional tie-ins. With Samsung shipping 85 million smartphones a quarter, it could buy endorsements from Jay-Z, Kanye, Ellen DeGeneres or anyone else.

Lee Kun-hee has not been seen in public since he suffered a heart attack in 2014. His son, Lee Jae-yong, is tapped to succeed his father, but the family is a minority shareholder in Samsung's 50 companies—or is it 60 or more, as some sources say?—and Lee Jae-yong may not be able to summon the alliances required to keep this sprawling enterprise in family hands. He and his sisters are also facing more than $6 billion in estate taxes, not to mention his own five-year prison sentence for bribery and embezzlement, which is currently being appealed. Stay tuned for the next installment in this long-running drama.

Mr. Bass is the author of three books on Asian politics and culture, including "Vietnamerica" and "The Spy Who Loved Us."

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