Globalization Lesson from Samsung

This Samsung innovation seems impossible if it was not supported by qualified human resources who have a good vision about the future. In Samsung Group, there was a third of 1,000 of its directors aged in 40 years or younger. Around 1,700 of its staffs were educated on a doctorate level, and amount 350 staffs have MBA degree. Most of them got education in overseas, like in United States or Europe. Samsung also revised the concept of “Samsung man” that emphasized more on the creative individual, has wide view and high moral standards.

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GLOBALIZATION is often regarded as a very bad matter, for example, can cause of the government authority reduction to control its people, and to control the current of things, services, and production factors back and forth the country. The globalization is sometimes regarded as the threat for the totality of the nation and the territorial. The globalization that is colored with the expansion of the multinational companies to the developing countries is accused for doing exploitation of nature resources, humankind, and the local values. As a result, then emerged activists or the group of anti globalization that opposed globalization, not against the negative impacts of globalization. The local companies that could not compete or will be bankrupt completely if there are some foreign companies enter the domestic market, became of their business in lobbying the official or the regulator so that the protection is extended, or if it is possible, it could be increased.

However, for business groups in South Korea, the globalization that increasing greatly since the 1980's considered as a challenge that can be avoided. Moreover, globalization was used as the opportunity to increase their achievement, not as the reason to protect themselves. The wave of globalization that struck all over the world has big influence in hurling the locative advantages of the companies South Korea in the form of protection, subsidy from government, the cheap wages for worker and economics scale. However, the globalization also changed the business groups in South Korea or chaebols became more competitive, until finally could gain profit from globalization.

Why? According to Kae H. Chung and his two colleagues, the professor from Yonsei University of Korea, Lee Hak-chong and Jung Ku-hyun, who wrote a book Korean Management, Global Strategy and Cultural Transformation (1997), the globalization challenge was answered by CEOs and the owners of companies in Korea by doing the drastically reorientation toward their business value. If in the export-boom era 1970's and 1980's, the success was received with the orientation of low technology and low-price products, then since 1990's became more in the quality oriented. Increasing the product quality was the strategy to survive in the domestic and international market. The competition that was so hard, forced them to say goodbye to the production pattern of quantity oriented, fulfillment of the export schedule or efficiency with mass production.

Lee Kun-hee, the chairperson of one of the largest business groups in South Korea, Samsung, told about the pattern of thinking that emphasized to the company growth by increasing the volume as “Samsung’s disease”. It referred to his findings that 1,000 Samsung staffs were busy to repair 20,000 Samsung products that failed each year that was made by 30,000 Samsung staffs. He criticized this work procedure as “things that were most inefficient in the world”. According to him, “Making the failed product is like cancer and a criminal act in management” (Kraar, 1994). Lee also declared the Quality Management Program and sent 850 Samsung senior executives to Frankfurt, London, and Osaka to have the management quality training so that these Samsung executives realized how low their products quality they made in the world’s view.

The rumors on the low quality of product that was made by Koreans did not only become attention of businesspersons, but also became social and cultural rumors in national level. In October 1994, South Korea was shock by the collapse of Sangsoo Grand Bridge, a big bridge that connected the northern part of Seoul to the southern part of Seoul. The bridge was only less than 6 years old. In June 1995, Sampoong Department Store that was not 5 years old yet has collapsed, killed 458 people, and injured thousands of people. The two tragic incidents really arose up the awareness of Koreans on how bad their work quality. They used to be obsessed to work quickly and made things as much as possible, but ignored the quality. Since the incidents, the quality became the value oriented of their work that really was revered by South Koreans.

South Korean companies realized that technology played a very important role in increasing the quality of products. Previously, they relied on low and out-of-date technology that was easily obtained from the developing countries because they were not already used anymore. However, when the globalization and the market competition demanded the best quality on South Korean products, they needed more advance technology that was not easily given by the developed countries. As the result, South Korean companies became care on developing their own technology, such as by increasing the research and development (R&D) activity, building the research laboratory and developing products, and recruiting more scientists from inside and outside of the country.

Samsung applied this technology reorientation under the slogan “Innovation”. For Samsung, it means, “develop through the globalization to globalize Samsung”. Yun Jong-yong, vice president of Samsung explained the blows of “Samsung Innovation” in front of Asian Pacific Forum conference in Japan at 2003. Firstly, Samsung refused to accommodate the will from the groups that obstructed the company progress. For example, the interests of the company owners that often collided with the demand of efficiency and global competition. Secondly, the innovation was carried out in stages, begun from the points that relate the routes and the channel in the groups of the company. Therefore, the company created the atmosphere that can make each Samsung staff has self-confidence to create innovation. Thirdly, the management told about the company's perspective and target clearly to all of the employees and be ready to delegate their authority.

This Samsung innovation seems impossible if it was not supported by qualified human resources who have a good vision about the future. In Samsung Group, there was a third of 1,000 of its directors aged in 40 years or younger. Around 1,700 of its staffs were educated on a doctorate level, and amount 350 staffs have MBA degree. Most of them got education in overseas, like in United States or Europe. Samsung also revised the concept of “Samsung man” that emphasized more on the creative individual, has wide view and high moral standards.

According to Yoichi Funabashi from the Asahi Shimbun newspaper, Tokyo, the globalization also means the opportunity to get the best from other companies in order to find and develop the best from their own company. Yoichi saw Samsung had found the excellent opportunity from this globalization by constructing the synergy with the Japanese company as its competitor, Sanyo Electric Co. In 2002, Sanyo and Samsung formed the joint venture and agreed to develop future generation of technology (The Jakarta Post, August 14, 2003).

Evidently, this Sanyo-Samsung cooperation succeeds in making them found the important assets in the form of work culture in company. Satoshi Ieu, Sanyo’s CEO and Chairman realized that Sanyo and Samsung employees had different work culture when he heard Lee Kun-hee’s said, “Japanese tableware are made from ceramic. It is fragile, so Japanese treated it very carefully. But, Koreans tableware was made from metal that was not easy to break, so the Koreans have not the spirit to hold it carefully”. (Note: Compare the traditional tableware of Indonesians called 'pincuk' that is made from bananas leaves. After eating, it will be thrown away. It possibly causes the carelessness of Indonesians compare with the Koreans? -The writer)

Satoshi Ieu was really impressed with Lee Kun-hee’s observation. Then, the cooperation between Sanyo and Samsung were extended covered the redefining of work culture and corporate culture, especially their respective experience in dealing with the globalization. The co-operation between Samsung and Sanyo, two foremost business groups in South Korea and Japan, simply was the result of a conviction that if two companies combined their power, they will receive the new values and power to deal with globalization.

The way Samsung in responding to globalization and the process of Samsung globalization destroyed Flying Geese theory that was created by Professor Kaname Akamatsu saying that Japan will always be in front of other Asian nations in the process of globalization. As the world’s biggest producer of memory chips, Samsung proved that globalization always did not have a bad impact. More than that, Japan that always be in the leading position in the past, has already began to learn from other Asian countries, for example, South Korea.***

Photo: http://www.samsung.com

The Uniqueness of Korean Currency

Until now, South Korea is still using the 10, 50, 100, and 500-won coins. How was about the paper money in South Korea? South Korean paper money, at this time, issued in 1,000, 5,000, and 10,000-won. The story behind the printed picture on this paper money was as interested as the picture on the coins. Those three paper money was printed the pictures of the famous figures during the Korean history.

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NO one doubted that this thing was really needed when visiting South Korea. Moreover, this thing became one of the most important matters that must be on our hands before stepping into the Kimchi country. Because of its important value and function, I often brought it everywhere in my wallet. However, just recently, I paid attention with curiosity toward the meaning of the pictures that were printed on the South Korean paper money and coins.

Prof. Andrei Lankov’s article from Australian National University (Korea Times, April 13th 2004) entitled "The Other Side of the Coin" concerning to the history of Korean coin, made me aware that the pictures were printed on the South Korean currency, in fact, had a very interesting story and historical background. Moreover, Korean unique culture and values of life could be known from the currency picture.

Actually, South Korea just only had its own coin on 1959. During the Japanese colonization period (1910-1945) and before 1959, South Korea used the coin from this samurai country. The first South Korean coin was printed overseas, that was in Philadelphia (United States) with three values: 10, 50, and 100-hwan. Evidently, South Korean currency previously was named hwan, not won.

On the 100-hwan coin, there was one side face portrait of the first South Korean president, Rhee Syngman. President Rhee previously was an independent activist that was very determined opposing the Japanese colonization. On the other side, there was a picture of two Phoenixes with long tail dangled. The uniqueness, the publication year of this coin was printed 4292. Why is 4292? Because, up to 1962, South Korea still used calendar system which was called "Dangun era". If it was counted from the year of South Korean establishment, 1959 was the same with 4292, based on Dangun calendars.

On 10-hwan coin, there was the symbol of South Korean that was called as Mugunghwa (The Rose of Sharon), whereas the 50-hwan coin, there was a boat picture. This boat had a special story. During 1592, in order to open the trade route to China, a Japanese Emperor was named Hideyoshi sent 170.000 troops and 700 warships to invade Korea. At the time, the Korean navy was in very small amount but did the strongly struggle and attacked the Japanese warship by using the iron stratified warship that was similar with a turtle. Japan was being repulsed successfully in the 7 years war, called Im Jin War. Then, the boat was famous with the name” turtle boat".

Hwan currency was valid only up to August 1966 or circulated around 7 years. In that period, there were several basic changes in the design of South Korean currency. New currency also in coin shape but it was called as won. The Dangun calendar was replaced with the ordinary calendar. And on the other side where there was written the value of currency, no longer included “the Republic of Korea” but Hankuk Enheng (the name of the South Korea’s central bank).

One of the coins, that were established during 1966, 10-won, illustrated with Dabo Pagoda (Dabo Tap). The pagoda was one of the most beautiful remains of historical architecture in Korea. This pagoda design was looked feminine and complicate; it seems depicted the complexity of the world life. The pagoda that was built in 756 still exists in the yard of Bulguk Temple (Bulguk Sa) in Kyeongju city, North Kyongsang Province.

At the end of the 1960's, coin 1 and 5-won became the coins that mostly used by the South Korean people. At that time, the cost to travel by trams only 5-won (in 2004 the cost for subway is 800-won). However, the 10-won coin, that was in golden color and illustrated Dabo Tap, became the most favorite coin of Korean people in that period.

Until now on, 10-won coin issued in 1971 and 1972 still circulates and currently as the valid payment. I often accepted this coin as the change and I collected them to buy a cup of warm and delicious coffee cream from drink machines. Whereas, the 1, and 5-won coins, since the end of the 1980's, had started unused and I have never seen them until now.

The inflation during 1970 led to the issuing of the new 100-won coin. In one of its side, there was illustrated the face of Korean legendary figure, Admiral Lee Sun-sin (which his statue stood strongly in the Gwanghwamun area in front of the Kyeongbuk Palace, Seoul). The admiral who created the "turtle boat" and at the same time led Korean troops against the invasion of Hideyoshi Emperor. Because of his services, his face was perpetuated as the picture of 100-won coin.

The 50-won coin was printed firstly during 1972 and illustrated a clump of bowed rice. Why the clump of rice was used as the picture of the coin? Rice was the very important crop for the Korean people since long ago because as it is their staple food. It was difficult to imagine if there is a day for Koreans without eating rice, as difficult to imagine Koreans without eating kimchi.

Finally, in 1983, it was issued the biggest and the highest value coin, 500-won. Its picture is flying heron with its stretching wings. The bird that is often found in the rice fields considered as the symbol of peace for the South Korean people.

Until now, South Korea is still using the 10, 50, 100, and 500-won coins. How was about the paper money in South Korea? South Korean paper money, at this time, issued in 1,000, 5,000, and 10,000-won. The story behind the printed picture on this paper money was as interested as the picture on the coins. Those three paper money was printed the pictures of the famous figures during the Korean history.

Firstly, on 1,000-won paper money that was in purple, there was the picture of Yi Hwang face (lived around 1510-1570 periods). He was an intellectual and famous philosopher in the Yi Dynasty era (Choseon Kingdom period). Although getting the highest position among the official of kingdom, he chose to retire and return to his village where he became the famous intellectual. He wrote many theories especially about Juja Hak (Confucianism) and established Dosan Learning Institute. His interpretation about Confucianism known as Dogya Hak became the subject of the study in Western and East World until now.

Next, the South Korean paper money that is in light brown color was value in 5,000-won. Here, there was the face Master of Yi-I (lived around 1536-1584). He was also a big intellectual in the Yi Dynasty era and known as a genius because of passing the official kingdom's exam in the age 13 years. After doing many tasks of kingdom, he withdrew and devoted himself to be a writer. He published many books concerning about philosophy, Confucianism, and public administration. Both Yi-Hwang and Master Yi-I could become the model as the person who left very high position in the government (the position that very prestigious and was desired by everyone in that period) and chose to become an intellectual who brightened the community with his thinking.

Finally, the 10,000-won paper money in bright green color and become the highest nominal in South Korea at this time. In this paper money, there is the face of most popular figure in Korea, Sejong The Great or King Sejong (1397-1450). His biggest service to Korean people was creating the Korean alphabet known as Hangeul. In his governmental period, King Sejong saw many peoples could not read and write Chinese alphabet that was used by the educated group. He understood the people’s frustration that could not read and communicate thoughts and their feeling in writing. He afterwards organized a team to create the alphabet that was easily understood by Korean people. This alphabet became the root of modern Korean language that was used everyday until today.

(Note: One day after attended Korean language classes, my classmates from Japan, Mongolia and I went to have a lunch. While waiting for our food, we observed a 10,000-won currency of our payment for the food. My Mongolian friend said, “Let’s see the figure (King Sejong) in this currency, because of him we study Hangeul and we knew each other in South Korea.” There are many students around the world studying Hangeul in Korea, indicating that Korean alphabet has been globalizing).

The popularity of South Korean currency, both of coin and paper, since several years ago were competed by the credit card that is called sinyung card. Almost everyone in South Korea had a credit card that could be used to shop almost all the goods and services. Because of the ease in having the credit card, (that often was issued by the bank although the recipient did not have fund in the bank) the South Korean society do excessive expenses. What is the result? At this time in South Korea, around two third from total problematic credit was its inability to pay the credit card bill (Korean Herald, June 20th 2004). Deeply regretted if the South Korean currency would loose fast because of their inability to compete with the "plastic money" or because of the height of inflation, like what has happened to 1, and 5-won coins.

In my opinion, it will be good if all kinds of South Korean currency could circulate longer. This is because South Korean coins and paper money had higher "value" than the credit card. That is, by studying the meaning of the pictures of South Korean coins and paper money, could remind the people to the very important matter of nationalism, culture and life values of their nation. Compared with the nominal value, it is the highest "intrinsic value" in this currency.***

Daehangno, July 14, 2004
Photo: Andy Fadly Yahya