Mic Wright wonders why Samsung isn’t more closely scrutinised, given the company’s chequered past and allegations made against its ruling family’s professional ethics.
It’s never a good idea to accidentally give journalists access to your internal reports about them. If I were to write a book on PR best practice, that would certainly be on a page headed OH BOY, YOU DONE GOOFED.
In 2007, after returning from a trip to Korea with Samsung, I got a peek at the company’s documents about the trip when, presumably, a PR person pressed the wrong button. I was working for Stuff and flew to Korea with a gaggle of British journalists and a stereotypical collection of continental hacks (seriously, the Germans wear suits all the time).
It was an interesting trip. I saw the bizarre devices that get released in the South Korean market, got a taste for kimchi and visited more identical factories than I imagined could exist.
Aside from the tech tourism, Samsung’s aim was to introduce the assorted tech press to its latest phone, the F700, a device now playing a central roll in the company’s legal battle with Apple. The iPhone had been shown off in public at this point but was not yet released and Samsung was desperately keen to show that it had the future of smartphones nailed.
We were told early in the trip that mentioning Cupertino, Steve Jobs or the iPhone was a no-no. So, showing the due deference you can expect from the British press, we asked every executive wheeled out to lecture us what they thought about the iPhone and how Samsung intended to counter it.
Koreans are an intensely polite people and the rictus grins didn’t crack but it was clear they were unhappy with our line of questioning. Why weren’t we bowled over by the F700? (We didn’t say: because it was about as responsive as a stoner in hour 40 of a Resident Evil marathon.)
Reading the accidentally released PR report after the trip, I discovered that the home team at Samsung considered it to be a “major success” marred only by the “negative attitude of the British group who seemed to care only about getting back to the hotel bar which they colonised throughout the visit”.
That, my South Korean friends, is what we call a lesson in cultural difference.
Generally, gadgets have a mayfly-like lifespan, particularly for professional gadget reviewers who tire of new tech so quickly that it’s rumoured they contribute approximately 40 per cent of landfill with discarded LG phones and hideous iPod speaker docks.
The F700, an faintly disappointing touchscreen device, has survived for longer, a symbol for Samsung that it was ahead of the iPhone curve and evidence for Apple that the South Korean design philosophy changed significantly after Cupertino uncovered its iOS device.
An illustrated guide from the rather delightfully named Peanut Butter Egg Dirt shows just how the designs of the F700 and a Samsung tablet, the Q1 OLPC, were entirely different from the Samsung Galaxy range that emerged after the iPhone began to shift significant units. The F700 was a rectangular phone with rounded corners and a user interface predicated on simple blue icons.
The Samsung Galaxy S, released in 2010, is a very different beast to the F700. It does not appear to come from the same design lineage at all. Instead, Apple alleges, it explicitly mimics the layout of the original iPhone, with silver edging, rounded corners and icons with the same layout and, in some cases, extremely similar designs.
Apple’s case goes further suggesting that Samsung also copied its “trade dress”, i.e., the manner in which it presents its products and designs packaging. The visual guide certainly betrays signs of that to my eye.
Now a memo from Samsung’s head of mobile communications, JK Shin, has been allowed as evidence in the trial and Apple’s claims have gained greater weight. In what is a very emotive message by Korean standards, Shin expresses his fears that Samsung has focused on fighting the wrong competitors:
“Influential figures outside the company come across the iPhone and they point out that ‘Samsung is dozing off.’ All this time we’ve been paying all our attention to Nokia and concentrated our efforts on things like Folder, Bar, Slide.
“Yet when our UX is compared to the unexpected competitor Apple’s iPhone, the difference is truly that of Heaven and Earth. It’s a crisis of design.”
The memo appears to put pay to Samsung’s attempts to cast its Galaxy line as an organic development of its technology rather than an active attempt to create a take on the iPhone:
“I hear things like this: Let’s make something like the iPhone… when everybody (both consumers and the industry talk about UX, they weigh it against the iPhone. The iPhone has become the standard.
“That’s how things are already…do you know how difficult the [Samsung] Omnia is to use? When you compare the 2007 version of the iPhone with our current Omnia, can you honestly say the Omnia is better?”
Sadly, design is not the only aspect of the sprawling Samsung organisation that is in crisis. In a paper published by the International Journal of Occupational and Environmental Health in its Summer 2012 edition, Samsung is highlighted as one source of major health issues in the semiconductor industry.
The study, “Leukaemia and non-Hodgkin’s lymphoma in semiconductor industry workers in Korea”, says: “Samsung, the world’s largest information technology and electronics corporation (as measured by revenues), has refused to make public such data concerning the industrial processes that affect electronics workers and has impeded attempts by independent researchers to obtain essential information.”
An editorial in the same issue notes Samsung’s stance against unions and top-down, highly-centralised approach to corporate governance:
“[Samsung’s] long-standing policy prohibits union organising [and has] attracted critical attention. Samsung’s overall corporate structure centralises the policy-making that governs the activities of its vast network of subsidiary corporations.
“This centralisation of decision making has received critical assessment even from investors concerned about Samsung Group’s overall corporate efficiency.”
Samsung is a “chaebol” – one of the family-run conglomerates that dominate South Korean society. Almost Mafia-like in their obsessive secrecy and reach, chaebols have influence in most markets and industries in the country and wield huge political influence.
They have also not been shy of using underhand methods to maintain their position. In 1997, South Korean journalist, Sang-ho Lee, obtained secretly recorded audiotapes of conversations between Haksoo Lee, the vice-chairman of the Samsung Group, and Seokhyun Hong, the Korean ambassador to the US and then publisher of the Joongang Daily, a major Korean newspaper affiliated with Samsung.
The recordings were made by Korean’s secret intelligence agency, the NIS, itself implicated repeatedly in bribery, corruption and money-laundering.
They revealed that Haksoo Lee and Hong were planning to deliver upwards of 3 billion won – around £2 million – to presidential candidates ahead of South Korea’s elections. Sang-ho Lee’s investigation, which became know as the “X-File”, had a significant impact.
Hong resigned as ambassador and an official probe was launched into illegal funding of political parties by Samsung and the NIS’s illegal wiretapping operation. In an interview (PDF) with the Cardiff School of Journalism and Cultural Studies, Sang-Ho Lee speaks about the article’s effect:
“People actually realised the power of capital after my report. Samsung owns Joongang Daily… it also has unprecedented power over journalism because it has the economic power to buy advertising space and time
“It is hard to criticise Samsung as an individual journalist. It is considered insane.”
Lee found himself under significant pressure. He says: “[Samsung] used the legal system to block me from reporting anything against them or anything that made them uncomfortable. It was a waste of time. I was branded a troublemaker because people think legal cases harmed my company’s reputation.”
Yet Samsung seems capable enough of making trouble for itself. In 2008, the current Samsung chairman, Lee Kun-Hee, stepped down after his house and offices were raided and a police investigation began into claims that the corporation was maintaining a slush fund to bribe court officials and politicians.
Found guilty of financial wrongdoing and tax evasion by Seoul Central District Court on July 16 2008, Lee Kun-Hee was in serious trouble. But despite prosecutors requesting that he be sentenced to seven years in prison and fined $347 million, the sentenced handed down was three years suspended and $109 million in fines.
The South Korean Government pardoned Lee Kun-hee in 2009 to allow him to help with its successful bid to host the 2018 Winter Olympics. He is now a member of the International Olympic Committee and returned as Samsung’s Chairman in March 2010.
Lee Kun-hee’s children hold key positions in the company. His son, Lee Jae-yong, is President and Chief Operating Officer of Samsung Electronics. Lee Boo-jin, his eldest daughter, is President and Chief Executive Officer of Hotel Shilla, a luxury hotel chain, and President of Samsung Everland, a theme park and resort operator that acts as de facto holding company for the entire conglomerate.
Further branches of his family tree are inextricably tied to the business. His siblings and their children are executives at major Korean groups. One nephew is chairman of CJ Group, a holding company with interests in food, drink and entertainment.
Another runs Saehan Media, one of Korea’s largest blank media producers, while his older sister owns Hansol Group, the company’s biggest paper manufacturer which also holds assets in electronics and communications. Another of his sisters is married to the former chairman of LG and his youngest sister heads up Shinsegae Group, the largest consumer retailer in Korea.
All is not rosy in every part of the Lee dynasty. His older brothers, Lee Maeng-hee and Lee Sook-hee, began legal action against him in February of this year, claiming they are entitled to hundreds of millions of dollars worth of shares in Samsung companies left to them by their father.
It’s clear that the issues with Samsung run deeper than those raised by its legal fight with Apple. Yet while Apple is frequently upbraided in the press for conditions at its Chinese manufacturing partners’ factories and the environmental sustainability of its products, Samsung’s travails receive very little Western press.
As Apple’s only significant competitor in the tablet space – besides Google’s rather tasty Nexus 7 – and the only third party making real money from Android, Samsung should be more closely scrutinised.
The idea that South Korea is a shiny futurescape of democratic wonder is ultimately the result of sitting next to the fetid, Communist disaster that is North Korea.
The South looks better, thanks to the success consumer technology and semiconductors has brought, it but the grip of the chaebols is pernicious and corruption lies beneath every facet of Korean society.
You’re welcome to love Android and hate Apple. Just don’t be fooled into thinking Samsung are the good guys.