TechStuffTechStuff Classic: The Samsung Story Part 1
How did the company Samsung get its start? From its humble beginnings as a grocery and shipping company, we look at the complicated history of one of South Korea's most influential companies.
Welcome to Tech Stuff, a production from iHeartRadio. Hey thereon Welcome to Tech Stuff.
I'm your host, Jonathan Strickland.
I'm an executive producer with iHeart Podcasts and how the Tech are you? It is a Friday, it is time for a classic episode. We're actually going to have a two parter, so part one will publish today and part two will publish next Friday. But this originally published back on May twenty fourth, twenty seventeen, and I gave it the imaginative title The Samsung Story Part one. Enjoy Now. Samsung's a Korean company. That means there's going to be a lot of Korean names that I am going to slaughter in this episode, and I sincerely apologize from the beginning at how I am going to butcher the pronunciation of these names. I'm going to do my best, but chalk it up to cultural ignorance, folks. I just don't have the experience with the Korean language to say all the names properly. Will I will try my hardest to do it, but I just want to make that clear because I know it's important, and I apologize for not being able to nail it. But it's largely just due to my lack of exposure to the Korean language. Now, Samsung was founded in nineteen thirty eight by Li Byong Chol, and originally it was a very modest company when it first started, but today it's a giant with more than one hundred and seventy billion dollars in revenue. So let's talk about its humble beginnings and how it first got started, because it was entirely different when it first when it was first founded. So here's another tricky thing about this company. To understand its rise, you also need to understand a little bit about the history of Korea, and this is an area of the world that I had not really studied that much. East Asia has not been one of the focuses of my studies, and so for a lot of this it was all new information to me, and it really displayed to me my depth of ignorance of East Asian history. But it is fascinating and it does, in fact tie into Samsung. It has a profound effect on the history of the company and even a motivation for the existence of the company in the first place. So we're going to look a little bit at world history before we get into the history of the company itself. Bear with me, because, like I said, it's fascinating and it's important so that you understand why the company is the way it is now. One thing that we have to keep in mind at the beginning is that when the company was founded. When Samsung was first founded, the Korean people were an occupied people. For centuries, Korea had been the center of power struggles between other nations. The Korean Peninsula is incredibly valuable for multiple reasons, and so a lot of different countries had interest in trying to control it, putting the Korean people in the middle as a result. In the nineteenth century, so the eighteen hundreds, the two main powers that were struggling over Korea were Japan and China. There was actually a war fought largely on the Korean Peninsula between Japan and China in eighteen ninety five, and the Japanese won the conflict and essentially eliminated China's interests in Korea. But Korea's queen formally well not formally casually really known as Queen Men and later known as Empress Myeong Seong, was hopeful that she would be able to entice Russia to support Korea against Japan, so there grew a new rivalry. You know, China was now fading away after losing to Japan in this conflict. There was a new rivalry between Japan and Russia, and Queen Men was hopeful that Russia would end up helping out Korea because she really didn't want Japanese influence infiltrating the country. She was technically the wife of the king, the last of a dynasty of kings in Korea, but had considerable influence. She was effectively a ruler in Korea and had put several of her most trusted advisors and relatives into high positions of power. She was also pretty well liked by a lot of the Korean populace, more so after the events I'm about to describe happened. So the government of Japan viewed Queen Men as an impediment to their plans, and they tried numerous times to instill a rebellion against her, to try and encourage aspects of the Korean government to oppose Queen Men and overthrow her, but they didn't really work. So the Japanese government worked with these various political rivals but didn't make a whole lot of progress, and they decided to take more drastic measures. So on October eighth, eighteen ninety five, Japanese ronan in other words, warriors for hire, working with some of Queen Men's rivals, were able to infiltrate her palace. The Ronan killed Queen Men. They assassinated her along with two other ladies in waiting, and they positively identified Queen Men as one of the three women. The fallout from this act was considerable. There were international pressures that forced the Japanese government to put the people who were involved in the assassination on trial. So the Japanese government did. They brought the people in, they gave them trials. However, all of the people were eventually acquitted due to lack of evidence according to the Japanese government, which did not go over well in the international community either. Within Korea itself, there was a growing sentiment that was anti Japanese. It had already been present, but now it was really flaring up in the wake of Queen Men's assassination. Things got really complicated from there, so complicated that it's really not my place to dive that deeply into the history, but it is important to know the basics so that you understand the rise of Samsung, and it also gives you insight into the Korean mindset and philosophy of the time. In eighteen ninety seven, King Gojong, who was husband to Queen Men, founded the Empire of Korea. So this was a new imperial line that he was attempting to establish in Korea. Now, he had sought refuge in Russia after his wife had been assassinated, but he had been pressured to return to Korea. The various governments around the world were saying that he needed to be there to establish this government or else Korea would be plunged into chaos. So he did return to Korea and ended up giving Queen Men her title of Impress posthumously. Japan continued its efforts to expand into East Asia, and then there was the Russo Japanese War, the war between Russia and Japan, which waged from nineteen oh five or nineteen oh four to nineteen oh five. Sorry, now, the Japanese military won some key victories there and then really started to put pressure on Korea. As a result, they compelled the emperor to sign the Protectorate Treaty of nineteen oh five, which made Korea a protectorate of Japan. Now that largely stripped Korea of its nation status. It was technically a nation, but really only in Nane. It was more of an extended property of Japan at this point, and in nineteen ten, Japan went ahead and formally annexed the Empire of Korea. So over the next decade, from about nineteen ten to about nineteen nineteen, Japan forces subjugated Korea using force and severely restricting the rights of Koreans as a result. That particular era ended in nineteen twenty because the Japanese emperor was shocked when Koreans were able to organize mass, coordinated protests across the entirety of Korea, and the emperor realized if things didn't change, so he was going to have a full scale rebellion in Korea and did not want that to happen. So at that point Japan started to ease back on some of these restrictions and things got a little less tense in Korea. The reason why I tell you all this about this era between nineteen ten and nineteen twenty is that on February twelfth, nineteen ten, leb yung chull, the founder of Samsung was born. So he was born shortly well, right around the time that Japan was formally occupying Korea, so this is a very tumultuous time in Korea's history. Now, his family were well off and so he was in a better position than a lot of his fellow Koreans. He was from a wealthy family. They were landowners and they made their money through being landlords. They would rent out their property to other people. Now, Leb yung choll would study in local Korean schools before or he would go off to Tokyo to attend Waseda University. But his father passed away while he was in school, and so he ended up dropping out of college to return home to Korea and take over the family business, so he never earned his degree. That family business at the time was running a rice mill as well as being the overseer of these landlord properties, and the rice mill saw a lot of success. But at that time, Leeb young chol began to feel a greater ambition something more important than running a successful business. He wanted to do more than that.
We'll be back with more of the Samsung story after this quick break.
We're going to skip ahead now to nineteen thirty eight. So in this time he's running the business everything successful. He feels like Korea really needs something to help inspire the people and to jumpstart the economy of Korea itself because it was so dependent upon Japan, and that was something that was of great concern to Koreans. So the country had been under Japanese occupation for nearly three decades at this point in nineteen thirty eight, and since nineteen thirty one the Japanese rule had become more restrictive. So nineteen twenty nineteen thirty one things had eased up a bit, but from nineteen thirty one up to nineteen thirty eight they had gotten worse again. This was called the Assimilation period, in which Japan was effectively trying to wipe out Korean culture and make Korea essentially just part of Japan, officially part of Japan, and really exploiting Korea's resources as well. Now, Li Byong Chol wanted to make a difference. He wanted to create a successful business that Korea could call its own and create an industry where one had not existed before. The Japanese occupation had brought a couple of positive things to Korea, including industrialization and modernization, two things the country was far behind in compared to the rest of the world in general, in East Asia in particular. But as a Resultan Koreans were paying an incredibly high price. They were under restrictive rule, and the Japanese government and Japanese occupying forces were taking great liberties and exploiting people in horrible ways that I'm not going to go into here, but it was not great. Lee Byung chull was hoping that he could leverage the advances that the Japanese had brought with them and turn them to Korea's advantage and to truly have Korea emerge into the twentieth century as a power player. There was a long long way to go, so to pursue this, he decided to sell off the rice mill and to invest in a new company, and on March first, nineteen thirty eight, he founded the Samsung Trading Company. The initial investment, according to multiple sources, was about twenty seven dollars at the time. That's how much the founding Samsung Trading Company costs twenty seven bucks. That was thirty thousand and one, which is the Korean currency WN the one. If we throw twenty seven dollars into an inflation calculator and adjust for inflation from nineteen thirty eight to modern day, you would get somewhere in the neighborhood of four hundred and sixty dollars. But we have to keep in mind that this is not a apples to apples thing. Whenever we're doing currency conversions and inflation comparisons, we have to make a lot of assumptions. So let's just say founded Samsung with an initial investment that was somewhere in the neighborhood of five hundred bucks. So imagine saving up five hundred dollars and then founding a company. That's essentially what he managed to do back in nineteen thirty eight. As the company started to form, he hired on people, and initially the company had about forty employees. Now the company's name Samsung means literally in Korean three stars. The number three has significance in Korean culture. It often is associated with something that is really momentous or really strong and powerful, and the motto of the company is be great, strong, and everlasting, which seems like a pretty tall order, but the company's done pretty well since then. Its initial business was selling common goods and transporting products across Korea and into China, so it was essentially a grocery store and a trucking company when it first started. That's what Samsung's business was was groceries and transportation. A lot of company origin stories when they talk about Samsung say that it was essentially dealing in dried fish, which in fact was one of the main products that they carried was dried fish Korea. That was a major product there. But I think it oversimplifies the position that Samsung was in. I think a lot of people like to use that as a descriptor because they juxtapose that humble origin of Samsung being a company that sold dried fish and transported it into China to Samsung the multinational global electronics company, the giant that it is today, and I think that under sells what actually was happening. If I'm being honest, it's more of a store. Worry about a businessman who was trying to push against opposition in order to establish a new sense of identity within Korea. This was a country that had been the subject of interference from multiple countries for much of its history, and in fact, for the next several decades would still be the subject of a lot of foreign meddling. And so here was an attempt by a Korean citizen to say, let's make our own name and not have Korea be this extension of some other countries identity. And this is a big deal. But it is true that Samsung's early history had little to do with technology, apart from leveraging modern transportation conveniences like motorized trucks, which were pretty new to Korea at that time. The company saw success in its early years, so they did pretty well. The Japanese occupation of Korea ended in nineteen forty five when Japan surrendered at the end of World War Two, and at this point Korea was again in a time of turmoil. Japan's withdrawal from Korea didn't mean everything was hunky dory. In fact, things got really complicated. In theory, Korea was a single independent country, but in practice that really wasn't the case. The United States and Russia, both or the Soviet Union, both had interests in Korea and decided to essentially divide up the country. So everything above the thirty eighth parallel that's what Russia was looking at, and everything below that, that's what the United States was looking at. And a new leader named Lee Sung Man rose to take control of what would eventually become South Korea. And he wasn't the leader that all Koreans or even most Koreans necessarily preferred, but he had the support of the United States, largely because he was a staunch anti communist. So it wasn't a true republic. The people of Korea didn't get to vote on Li Sungman establishing control. He was essentially instilled as leader by the United States. Now, meanwhile, again the Soviet Union was looking at the northern part of Korea, and the Soviet Union established its own leadership that was totally separate from this leadership in South Korea, which, as you would imagine, caused a little bit of friction. Both governments, both the one in the northern section of the country and the one in the southern section of the country, claimed leadership across the entire nation. So you have two different governments both claiming to be the leader of Korea overall. Now, technically the United States and the Soviet Union had joint trusteeship overall of Korea. And technically they were supposed to come to an agreement as to what the government of Korea would be following its release from Japan, and then from that point forward, theoretically the people of Korea would have a say in how their government was formed. But that never happened because the Soviet Union in the United States didn't see eye to eye. They completely disagreed with each other's choices, and so this leadership question became a stalemate. Now, at the same time, Lee Byung chung wanted his company to reinvest in Korea and that was continuing to struggle in the wake of World War Two and the interests of the United States and the Soviet Union. So in nineteen forty eight, he founded the Samsung Construction and Trading Corporate or Samsung C and T. Now, this would eventually become the parent company of all the other Samsung companies, at least for a while, and so Samsung C and T became kind of like the top notch company under which all the others would fall. And often you'll see that the founding date for Samsung C and T is nineteen thirty eight, although really that was the Samsung Trading Company, the Samsung C and T was sort of the transformation of that company. So I guess it really just depends on your perspective as to whether or not you would call the founding of it being nineteen thirty eight when the initial company started, or nineteen forty eight when they formally created the organization known as Samsung C and T. This gets way more complicated the longer I go, So if you think that part is a little confusing, I apologize. It's not going to get any easier to understand. In fact, it gets really messy when we get up into the eighties, nineth these and the two thousands for Samsung's history. Now, another big thing happened in nineteen forty eight. That's the same year that Korea officially split into two nations. Remember I mentioned you had these two different governments that were in opposition to each other, both laying claim to the entire Korean country, and that could not sustain itself. In the South, Singhman Ri established the Republic of Korea, and in the North Kim Il sung became the leader of the Democratic People's Republic of Korea. The United Nations only recognized the Republic of Korea. The South Korean government as being legitimate. Meanwhile, the Northern Korean government began seizing companies and properties that were originally owned by Japanese or pro Japanese interests, and then claiming those companies for the state, so they were state owned and operated. At that point they had been seized by four Tensions between North and South Korea increased, with each planning to use military force against the other in order to reunite the country under one government. Now, at this time, Samsung had established a new headquarters building in Seoul, but in nineteen fifty, North Korean forces invaded South Korea and the two nations officially entered the Korean War. At that point, Samsung relocated its base of operations to Busan. Seoul eventually would fall to North Korea, but it would eventually also be returned back to South Korea once the two countries negotiated peace, and at the conclusion of the war, Samsung would return to Seoul as its base of operations. Now, I've got a lot more to talk about once we've gotten to this point where things are a little more steady for Samsung. But before I do that, let's take a quick break to thank our sponsor by nineteen fifty one, Korean War is now technically over. Things would continue to fall out until nineteen fifty three. But nineteen fifty one, Samsung was pulling in revenues of two billion one By today's exchange rate, that's about one point seventy five million dollars. But keep in mind that, you know, like I said earlier, when you talk about currency conversions and adjusting for inflation and that sort of thing, there are a lot of factors that are present that you can't necessarily account for easily. So just think of that as like a round number somewhere around two million dollars in revenue, which was a significant amount for a brand new company. I mean brand new in the sense of this. Korea had no real corporations that were of any real significance around the time. It had some industries, it had some companies, don't get me wrong, but Samsung was trying to establish a brand new era in the post industrial world of Korea, which underwent industrialization very rapidly and under Japanese occupation. It's just important to know that the company had been successful even in the wake of the Korean War. Now, during this time, the company expanded its operations by purchasing other businesses and getting into new industries. In other words, they were diversifying. It wasn't just groceries and transportation. So was it consumer electronics. Not yet. It'd be a long time before they would actually get into consumer electronics. But this was in part an effort to get Korea independent of imports. Korea was importing tons of stuff, and Samsung leadership said, what if we were able to produce these things within Korea so that we removed that dependence upon other countries and grew the economy of Korea as a result. It was a way of trying to stand on their own. So the new industries included a sugar refinery and a woolen mill. And since it's going to be a while before consumer electronics enters the picture, we're going to talk about how those work because they involve technology. So we're going to talk about sugar refineries and woolen mills now, because I thought, why not, it's the perfect opportunity. We'll start with sugar refineries. Now, the purpose of these buildings, these manufacturing plants, these factories is to purify or refine sugar. So, in other words, this is all about getting rid of impurities to create a pure and consistent product that table sugar type stuff granulated sugar. Now, there are actually two types of facilities you would use with your typical sugar refinery if you're using cane sugar. The first is a raw sugar mill, which turns plant sugars into a raw form of sugar that you can find in many stores or if you've ever seen that golden sugar that you can use in different places. A lot of trendy coffee shops use this raw sugar. That's what comes from sugar mills. But you would also take this raw sugar and you could give it to a sugar refinery which will further refine the product. And that's where you get the white sugar that is free of various impurities. So sugar starts off as sucrose. It's a carbohydrate that you would find in plants, and it's a byproduct or actually a product of photosynthesis. That's the process by which plants take energy from the sun and they produce food that they can use for their own energy later on. Now, I'm not going to go into the whole plant cycle here, because I assume you've been through elementary biology. But just understand that plants take water, minerals, carbon ditide, and sunlight and end up producing, among other things, sucrose, which eventually will undergo further transformations to become stuff like plant matter, fibers, complex starches, that kind of thing. Now, all green plants produce sugars, but some do it in higher concentrations than others and thus make a better product. Our better crop for you to grow if you want to harvest sugar, and sugar cane is about twelve to fourteen percent sucrosse, which is why we grew so much of the darn stuff a few hundred years ago. It's a really good crop to raise if you wanted to produce sugar or molasses, that kind of thing. Now, there are other plants that we use to harvest sugar, such as sugar beets, and the process is similar to getting sugar from cane sugar, but they're not exactly the same. They're close, but not one hundred percent identical. However, I'm gonna focus on cane sugar just for simplicity, So since I just want to talk about the technology and process of purifying and refining sugar, so to get sugar from sugarcane. You have to wash the stalks and then you have to shred the stalks turn it into kind of a pulp, and typically raw sugar mills use a contraption with rotating knives to do the trick. So it helps if you imagine that the sugar cane is a little James Bond and the rotating knives are the villain's method of torture in order to get information now in James Bond, except in this case, James Bond does not make a daring escape and then romance some other stalk of sugar. Instead, they get shredded, which I guess would make an exciting but short James Bond movie, and that's why they don't let me write screenplays. Anyway, you end up with shredded sugarcane, which you then wash thoroughly again and you put it through a pair of very heavy rollers to squeeze all that sugar out. Essentially, ju u is this pulp, so it squishes everything down. You get this cloudy sugary juice as a result, and you need to be able to remove stuff from that cloudy liquid in order to refine the sugar. So your next step is to make clarified solution. And you create the clarified mixture by adding in carbon dioxide and something called milk of lime. Now that's lime, as in the mineral lime, not the fruit. So in other words, you're using a diluted solution of calcium hydroxide and a source of carbon dioxide. Why well, when you mix these components together and you bubble carbon dioxide through it, so it's essentially a carbonation process, it begins to form calcium carbonate. And this stuff is kind of like chalk, and it ends up sucking up a lot of materials that you don't want in your sugars, like fat and gum and wax. That kind of stuff pulls that out of the solution. Now, those materials end up being heavier than the solution itself, so they all settle at the bottom. That way, you can just harvest the liquid from the top. Then you take the clarified juice and you put in a vacuum pan, So it's a pan that's actually subjected to vacuum to reduce pressures. Now by reducing the pressure, you also reduce the temperature you need to boil off liquid, which is exactly what you want to do. You want to start boiling off the water that's inside this solution to concentrate it, or you're making a concentrate. As this happens, the mixture turns into a thick, brown, rich syrup, and this is the concentrated form of that sugar juice. Now you still need to convert the syrup into sugar crystals. So typically you'd put this in another vacuum pan subjected to another vacum and you would also add some pulverized sugar crystals to act as sort of nucleic sites for raw sugar crystals to form around them. Think of it kind of like a rain cloud. Rain Drops form around tiny particles. It acts as a nucleic site for the moisture to form around the particle, and then it gets heavy enough to fall from the sky in the form of precipitation. Similar concept here, except instead of it being droplets of water, we're talking about crystals of sugar. It's just a little bit of lattice for the crystals to start forming around. So you get these sugar crystals glomming onto these nucleic sites as the water begins to boil off, and you're not done yet. You then would take this mass of crystals and you would put them into a centrifuge, and this kind of looks like a clothes dryer. It is a cylindrical container that's got perforated sides and it can spin very very quickly, and it slings more moisture outside of it while retaining all the crystals. You end up with raw sugar, which is kind of this golden color I was talking about. So that golden color is because the sugar crystals have a thin layer of a substance that we call molasses on them. So raw sugar has molasses around those those raw sugar crystals. If all you want is raw sugar, this is where you stop. Otherwise you then have to move on to the sugar refinery. So since Samsung had a sugar refinery, I guess I should explain how this works. Let's keep this sweet train a rollin. The typical sugar refinery takes in raw sugar from the mills, and first thing they do is they put the raw sugar in a mixture of water and sugar. This actually helps them separate the molasses from those raw sugar crystals. So you end up with a batter like substance called magma, the lish magma, and I am not making that up. That is actually the term for it. I do urge you to be careful if you're ever offered a sample of magma to taste, make sure you know which type of magma it is. The tasty, sweet kind is fine, but the kind that's underneath the Earth's crust is probably bad for you. Next, you put this magma into another centrifuge lots of centrifuges and water involved in this process, and you give it another spin. Now, this separates the molasses film from the crystals, so you can collect the molasses and you can sell that, which is great. It means that you can make use of a byproduct of the process of refining sugar, and it means that you have less waste. You're not just throwing the molasses away. You can actually sell that as another product, and it's more efficient, more effective use of the material. I'm in favor of it. Also, I like various desserts that are made with molasses because I'm from the South and they were very popular. Now, the remaining crystals go through a filtering process to remove any other impurities. It's still in liquid form in this point, so you're still talking about liquid sugar. You pass it through various filters. The color is golden until you pass it through some carbon filters, which removes that last bit of color, and you end up with the water white sugar syrup. Then you evaporate some more of the water to concentrate the mixture further. You put that mixture in another vacuum pan. You seed it with some crushed sugar crystals, and you allow the sugar, the granulated sugar to form. Then you put that mixture in yet another centrifuge, and then the crystals are washed with fresh hot water moved to dryers. You actually put this wet sugar in a dryer and the dryers will remove almost all the water, almost all the liquid and moisture from the sugar granules. They'll go from having about a one percent moisture content to point zero three percent moist your content. It's pretty phenomenal. Then you pass these crystals over a series of screens to separate the different sizes of grains of sugar, and then you got it. That's how sugar refineries work. You end up with the refined sugar at the end of it, at least for cane sugar. Like I said, beat sugar is slightly different, but not by a whole lot. But hey, I also mentioned woolen mills besides sugar refineries, and how do they work. We're going to talk about that for a second now, only briefly, because I also covered mills when I talked about them in the Industrial Revolution podcasts. So if you've listened to those, you know a little bit about how these work already, and if you haven't listened to those, I recommend it. It was a lot of fun for me to go and explore the history of the Industrial Revolution, which is a fascinating era in world history. Now. Broadly speaking, a woolen mill it takes animal fiber, typically wool, and turns into the useful stuff like yarn and felt. The mills allow for mass production of these products, which is something you couldn't really do before the Industrial Revolution. You could only produce stuff by hand, which obviously limited how much you could create at any given time. Typically, you start by washing the fibers. So you've got wool that's been harvested from sheep or so, I am told, give it a good wash. And then you end up taking the washed wool where you've gotten rid of as much dirt and grease and other stuff as you possibly can, and you then put it through a device called a picker or an opener. This is to remove tangles from the fibers. Also helps you open up the fibers so you can work with them and ensure consists and see as you work with the wool. Typically, the way these machines work is they have a conveyor belt on them. You put the raw wool on the conveyor belt, it pulls it toward the rest of the machine. And then we get into another kind of James Bond torture device, or maybe Indiana Jones if you prefer. Temple of Doom had that giant rock crusher. It's kind of similar to that, except imagine rollers that have a set of teeth on them. There's actually a couple different sets of rollers. The first set has small teeth that are meant to open and untangle the fibers. Then there's that set, by the way, is called lickers. I'm not making that up. Liquors are the rollers that fine teeth and start to open up the fibers on wool that leads to a drum that has larger teeth on it. This one is called a picker. So you go with the liquors and then you go to the pickers. By the way, if you really want to encounter some fun words, research wool mills because they have a language all unto themselves, and it's mostly fanciful stuff. In fact, the word fancy features heavily in wool mills. So once it passes through the liquor and the picker, the fiber is ready to have some conditioner added to it to make it a little more pliable and workable, and you move it to a separate device, the separator. The separator is meant to remove impurities like plant matter from the fibers, so stuff that didn't get removed from the initial washing. Some fibers need more than one pass through a separator in order to get the majority of the stuff out, so you might put it through a couple of times. The device also rolls and picks the fibers, with these impurities falling into the base of the machine, so you would just empty out the container occasionally when it would start to fill up. Now following that is another machine called a carter crder. Carding is all about aligning fibers properly, getting them all to line up in the same direction, so you want them parallel to one another, and you can do this by hand by using a pair of carters, which are sort of like specialized brushes. If you've ever used a brush that has metal teeth for combing in animals fur, specifically to help it when it's shedding, like if you have a dog that has an undercoat and you need to get that undercoat. Typically you would use a brush that has metal teeth to help grab onto those fibers and gently pull them away. Same sort of thing is used in carters, so you'd use a pair of these by hand. If you want to do it by hand and put some wool on one of the carters, use the other carter to gently pull the fibers, gently being the operative term because if you use too much force, you're just going to stick the two things together and you'll never move them apart. And as you do this, all the fibers start to line up in parallel. That makes it much more easy to work with when you want to do something like spin that wool into yarn. Well, the machines do this automatically. You've got another conveyor belt. You have a thing called the swift, which is got one set of teeth on it, and then you have the card, which has the other set of teeth on it, and by having one pull the other, or pull the wool against the other, you align all the fibers. This happens a couple of different ways, depending upon the actual machine, but at the end you get a thin web of wool where all the fibers are aligned properly, and you can then use that for whatever purpose you were planning. Further down. The description of a typical carter cracks me up because this is where we run into some of those terms I was talking about. It has stuff on it like a swift, a fancy, and a doffer, But the important thing to remember is that it's just about aligning the fibers properly. Now, the next step is dependent upon what you want to do with the wool once you've gotten to this point. If you're turning it into beelt, you have to convert the fibers into bats that's bat with two teas, or you can convert the fibers into rough yarn or something called roving or bumps. Otherwise you would have to draw the fibers, spin them into a finer yarn, ply that yarn, and then either wind it onto cones or process it a little bit more and then eventually turn it into skeins of yarn. And honestly, I'm left wondering how anyone ever figured out these processes in the first place, because none of them seem at all intuitive to me. If it were up to me, we'd all be wearing mud and leaves, because that's as advanced as I would be able to get. This stuff is like rocket science to me, or maybe magic, or a combination of the two. All Right, so we've covered sugar refineries and woolen mills. What else was Samsung getting into. Well, the woolen mill's subsidiary name was Child Woolen Fabrics Industries, and later it became known as just Child Industries ch EIL. This will become important later on when it becomes time to unravel which is kind of a pun the complicated corporate identity of Samsung. So for much of its history, this particular part of Samsung was focused almost exclusively on producing textiles. Eventually, Samsung would actually introduce a men'swar division that would also fall under this company. But that was in the eighties, so we'll get to that later. We've got a little bit more to talk about before I go into that. Let's take another quick break to thank our sponsor. In nineteen fifty seven, Samsung became the first company in Korea to hold open recruitment for new employees with an aim at recruiting college students graduates of college right out of the gate. So this was a new approach in Korea to create a means for college graduates to go right into the workforce. Recruits actually had to take a new employee course. It was an extensive course to become an employee at Samsung, and it served a couple of purposes. In one sense, administrators over at Samsung could determine where each person would best be used, what his or her talents would be best put forward, you know, whether you should put them in this division versus that division, this subsidiary versus that subsidiary. But it also gave these new employees the chance to learn Samsung's values, the way they do things, to get the specific skills they would need to excel at whatever job they would go to, so both parties were benefiting from this relationship. It wasn't just a means for Samsung to fill out its employee list, but also to make sure that the people they hired were the best fit and best trained for those jobs. And really they were trying to cultivate an efficient and effective workforce and it paid off. Samsung was in a position to make some bold moves into yet more industries. They had already started diversifying, and they continued to do so. It was flush with cash from its businesses and began to dive further into other ventures, including insurance, so again still not at consumer electronics. In nineteen fifty eight, Samsung acquired a company called Ncook Fire and Marine Insurance, which later became Samsung Fire and Marine Insurance, but by later I mean much later I'm talking nineteen ninety three, so it was still known by its old name for quite some time. Samsung also acquired dong Bang Life Insurance in nineteen sixty three, which would transform into Samsung Life Insurance in nineteen eighty nine. The company also took over a popular department and store in Korea, and Samsung had become the largest corporation in Korea and was transforming into a conglomerate of subsidiaries. Now we got to take a break from Samsung to talk a little bit more about Korean history, because again it's going to play an important role in the next era of Samsung's development. Had a big impact on how Samsung would progress. Now, when I last left off in the history lesson, I was talking about the formation of North and South Korea and how the split nation found itself the focus of the USSR in the case of North Korea and the USA. In the case of South Korea, you still had Lee Sung Man, who was that US backed leader who assumed control way back in the nineteen forties. He was still in control by nineteen sixty, and he had managed this by essentially changing the rules several times whenever he approached a term limit. But by nineteen sixty a substantial number of South Korean citizens had had enough. Lee Sung Man would flee to the United States as the people of his country began to resist his rule, and then they formed a second Republic of Korea. But this didn't last very long. The region was extremely unstable, so eventually a military leader named Bak Jong He seized control in a coupda'ta, forming what was called the Third Republic of Korea, although Bak ruled as a self appointed leader and had no structure in place for elections to replace him. So essentially he said I'm the leader, now just follow what I say. So technically he was a dictator, but he wasn't a despot. He led Korea into a new age of industrialization with Samsung poised to be a leader in that space, and he would rule for eighteen years during the Third and Fourth Republics of South Korea, and it was a relatively stable time for the country. So while the people of Korea didn't have any real say in their leadership, at least the lead wasn't exploiting his people, he wasn't taking advantage of his position, and he was making what a lot of people consider wise use of money that was coming from other countries like the United States, to actually invest back in Korea itself. So there's pros and cons to this particular arrangement. However, for Samsung, it was a slightly different story. Lee byung chul was in Japan during the coup d'ta and he decided to stay in Japan for a while. He actually led the company from Japan. He only returned to Korea after receiving assurances that his company would more or less be able to operate the way it had. But there was one enormous concession. Samsung had to surrender control of several financial institutions it acquired, essentially banks, and they had to turn those over to the Korean government, So that was a big change for Samsung. In nineteen sixty one, Samsung's founder became the first president of the Federation of Korean Industries. According to its website, this organization quote has championed the principles of free enterprise to achieve wholesome development of the national economy, end the quote. So it's an organization of Korean companies that are dedicated to making Korea a competitive player in the global marketplace, while simultaneously attempting to contribute positively to the socioeconomic climate of Korea itself. Samsung helped establish a couple of other industries within Korea during this time, including a paper manufacturing industry and a fertilizer processing industry. Samsung also began to explore the possibility of exporting more goods out of Korea, so not just producing stuff for Koreans themselves, but other parts of the world, reversing that trend of the country importing stuffwe In nineteen sixty one and nineteen sixty five, Samsung would see its export business increase by a factor of eight, reaching four point eight million dollars of business by nineteen sixty five. Also around this time, Samsung invested in broadcasting and newspapers inside Korea, creating a media division within the company. Samsung had also created a foundation to give back to the Korean community in nineteen sixty five, and the company founded the Korea Hospital in nineteen sixty eight. In nineteen sixty nine, Lee Byung Chol and Samsung received a Presidential award for the company's role in elevating Korean business in the post war era. It was also at this time that the company first entered the electronics industry, finally, thirty one years after it was founded. Now they're getting into electronics. He knew we would get there eventually, right, Well, we only have time to talk about the early days of Samsung Electronics before we conclude this episode. We'll talk a lot more about it in the second part. Now, Samsung's big goal was to move Korea off of imported goods in the electronics fields. Now that required setting up entire new industries in Korea. I cannot stress what a huge deal this is. It meant that you couldn't just buy semiconductor chips and other parts from other countries. They wanted to make those industries within Korea itself, which meant building the things or acquiring companies that were on the way to doing that and then putting them toward this goal. So Samsung Electronics was born as a result of this, and Samsung ended up acquiring about fifty percent ownership of a company called Korea Semiconductor and began to churn out parts to make electronics. Samsung established more subsidiary companies like Samsung electro Mechanics, Samsung Semiconductor and Telecommunications, and Samsung Corning, so lots more subsidiary to fall in line and help support this effort of bringing Korean electronics to the world, and they bullishly began to develop products. The first major Samsung Electronics product was a black and white television set sporting Korean components, so it was all Korean parts inside of it, and it hit Korean store shelves in nineteen seventy two. It was a black and white set, which meant that Samsung and Korea were trailing behind other countries at that point, since color television had actually overtaken black and white TV sales in nineteen seventy. If you listened to my episodes on the history of TV, you remember, even though color television had debuted in the late fifties and really got started in the sixties, it wasn't until the seventies that color televisions themselves started to outsell black and white TVs. But even so, even though it was a black and white set, it was still a huge hit in the Korean marketplace, and by nineteen seventy six, Samsung had sold its one millionth black and white TV set, so a pretty big hit. Samsung also produced washing machines starting in the early nineteen seventies they still do to this day. The company also incorporated a few more subsidiaries, because you know that has to happen every couple of paragraphs in my notes. At this point, Samsung really is a company of companies. They included Samsung petro Chemical and Samsung Heavy Industries in nineteen seventy four, and then Samsung Construction and Samsung Fine Chemicals by nineteen seventy seven. Also by nineteen seventy seven, the company began to export color televisions. And now we're finally getting into the realm of Samsung becoming a player on the international consumer electronics stage.
Well, that wraps up Part one of the Samsung Story. Next week the classic episode will be the Samsung Story Part two, because that's how numbers work. So I hope you are all well and I'll talk to you again really soon.
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