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Samsung and `wheeled products`

Posted December. 11, 2015 11:49,   

한국어

Lee Byung-chull, the late founder of the Samsung Group, suffered a bitter defeat in a war over artificial flavor enhancers. Samsung challenged Miwon (currently Daesang), which dominated the market in the 1970s, with products like Mipung and Aimi, only to fail. He is said to have confessed, "There are three things in the world that are beyond my control – my children, golf and Miwon."

His son and successor, Lee Kun-hee, has expanded Samsung to a truly global corporation but also suffered a failure in the auto-making business. A car buff, the junior Lee founded Samsung Motors Corp. in March 1995 and completed a production plant in the southern port city of Busan in November 1996. However, he faced a number of unfavorable conditions. Building the plant on Busan`s soft ground cost Samsung an excessive amount of money. A year after the plant`s completion, Korea`s financial crisis dealt a major blow to Samsung Motors. Finally, the Samsung Group sold off the automobile unit to the French carmaker Renault, completely taking its hands off the auto-making business. The Samsung Motors fiasco left a huge scar on Samsung and Lee Kun-hee, creating an unwritten rule within Samsung: "Never make anything with wheels."

On Thursday, Samsung Electronics announced that it would launch an automotive electronics division as part of its reorganization plan. Samsung`s return to the auto-making business came 15 years after the withdrawal in 2000. Automotive electronics refer to all types of electronic, electric and information-technology devices mounted on cars. Some people interpret the announcement as a plan to manufacturer everything about cars except for the steel frames. Automotive electronics is expected to provide a new breakthrough in the saturated electronics market. The placement of the automotive electronics division directly under Kwon Oh-hyun, vice chairman and CEO of Samsung Electronics, indicates how serious Samsung is toward the new business.

Samsung`s entry into the automotive electronics business, led by Vice Chairman Lee Jae-yong, the eldest son and heir apparent of the Samsung chief, is different from the strategies of the company`s U.S. rivals – Apple and Google, which are trying to develop self-driven cars. Samsung also stresses that it has no intention of plunging into the auto-manufacturing market. In a world where the industrial barriers between automobiles and electronics are rapidly collapsing, however, it is premature to determine what Samsung will do or not do in the future. We hope that the decision, which came amid concerns over Samsung`s reduction of its businesses following the launch of the Lee Jae-yong leadership, will contribute to creating a new growth business for the Korean economy.



shkwon@donga.com