New businesses

Samsung Group founder Lee Byung-chull decided to plunge into the semiconductor business in 1982 at age 73. Samsung officially announced its entry into semiconductors the following year, only to face cold reactions at home and abroad. The Korean government, which was implementing a tight monetary policy at the time, tried to dissuade Lee from making a “reckless investment.” The business environment was very unfavorable as Japan’s Sharp Corp., which transferred its technology to Samsung, was vilified in its home country as a traitor. Lee did not give up his ambition and pushed for the new business, however.

Today, it is hard to imagine Samsung Group without its chipmaking business. Later, Lee recalled that he made the bold investment with the conviction that Korea could not develop its economy without shifting to high-tech industries.

Hyundai Motor, one of the world’s biggest automakers, also got off to a difficult start. Hyundai Group began its automotive business as a joint venture with Ford Motor. As the American carmaker was reluctant to transfer its technology, Hyundai abandoned the joint venture and took a chance on developing its own model. Under Chung Se-yung, the younger brother of group founder Chung Ju-yung, Hyundai Motor hired an Italian auto design company while building an assembly plant and facilities at the same time. Finally, Hyundai gave birth to Korea’s first proprietary car Pony in 1976, when the Hyundai founder was over 60 years old.

Semiconductors and automobiles were new to Korean companies at the time. Korea had a wafer-processing company but it was almost non-functioning due to a financial squeeze. The domestic automobile industry was simply importing parts and assembling them. In the 1970s and 1980s, Korean corporations explored new business frontiers such as semiconductors, automobiles, shipbuilding and aviation. Entrepreneurs such as Lee and Chung played crucial roles in putting the Korean economy on an upward track.

Over the last 10 years, few Korean companies have explored new business frontiers. Some attribute it to the 1997 financial crisis while others say business executives now are not as entrepreneurial as their founders. Government policies emphasizing redistribution of wealth and welfare could also be a reason.

Samsung Group recently announced that it will enter the biomedical business. It has been a long time since Korea saw one of its large conglomerates entering a new sector. A number of domestic pharmaceutical companies also exist in Korea. Samsung should compete with global pharmaceutical giants such as Pfizer rather than with smaller domestic makers.

Editorial Writer Park Yeong-kyun (parkyk@donga.com)