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Samsung-A Family Business

Samsung started as a small trading business in 1938 and has grown into a massive conglomerate worth over $347 billion, led by the Lee family since its founding. It is comprised of major holdings like Samsung Electronics, Samsung Heavy Industries, and Samsung C&T. Though publicly traded, Samsung has always been controlled by members of the Lee family through creative accounting and political connections to avoid South Korea's high 50% estate tax, allowing them to retain control of the company across generations despite laws meant to prevent this. The current de facto leader, JY Lee, has pledged to be the last family member in control of Samsung.

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Saathwik Galimutti Elia
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168 views3 pages

Samsung-A Family Business

Samsung started as a small trading business in 1938 and has grown into a massive conglomerate worth over $347 billion, led by the Lee family since its founding. It is comprised of major holdings like Samsung Electronics, Samsung Heavy Industries, and Samsung C&T. Though publicly traded, Samsung has always been controlled by members of the Lee family through creative accounting and political connections to avoid South Korea's high 50% estate tax, allowing them to retain control of the company across generations despite laws meant to prevent this. The current de facto leader, JY Lee, has pledged to be the last family member in control of Samsung.

Uploaded by

Saathwik Galimutti Elia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Samsung-A family Business

When many Americans think of Samsung, they think of a


huge Asian company that makes Galaxy mobile phones
and tablets. Many assume that Samsung is similar to
American tech giants like Google, Apple, or Microsoft, and
that the company is public and run by hired executives.
Although the company is traded publicly, it isn’t run like an
American company. Samsung has actually been a family
business since its inception, with its leader being a direct
descendent of its founder since 1938. This has led to
some very interesting business practices and a significant
cultural impact to its home country of South Korea.

BC Lee started Samsung in a small town mainly trading


fish and other produce. The company was successful and
grew not only through sales, but acquisitions as well. The
Samsung Group would eventually own companies in
multiple industries such as construction, insurance, sugar
refining, wool mills, and more. Today “Samsung” refers to a
multi-national conglomerate worth more than $347 billion.
Some of their major holdings, all ranked among the largest
in the world, include:

 Samsung Electronics: mobile devices and CPU


manufacturing
 Samsung Heavy Industries: one of the world’s
largest shipbuilders
 Samsung C&T: one of the world’s largest
construction companies
 Samsung Life Insurance
 Cheil Worldwide: Ad agency

Throughout its entire history Samsung has always been led


by a member of the Lee family. For example, after BC Lee
passed, his son KH Lee became the leader and Chairman
of the Samsung Group. This practice is interesting due to
the fact that South Korean citizens cannot simply pass on
assets without paying an inheritance tax. The country
actually has one of the highest estate taxes in the world,
which is 50% of estates that are worth more than $250
million. This is obviously a problem for billionaire families
that want to retain control of their company. The Lees have
a family net worth of over $40 billion. They been
successful in keeping Samsung within the family through
the support from the general South Korean public as well
as creative accounting strategies.
As stated earlier, the primary problem of passing along
control of Samsung is South Korea’s estate tax. If KH Lee
died, and JY Lee actually paid the full estate tax, it would
amount to over $7 billion. JY Lee would have to sell shares
of Samsung to pay this amount, effectively ending his
complete control over the company. The current chairman,
KH Lee, was able to retain control of Samsung from his
father through embezzling and tax evasion. He was
actually convicted and found guilty of this, however, due to
his political connections, he was able to secure a pardon
from the President of South Korea, Lee Myung-bak. That is
the power of chaebols in South Korea, where even when
found guilty in the court of law, chaebol members can
escape punishment and continue working business as
usual.

KH Lee is still out of the public’s eye and the technical


leader of Samsung. JY Lee is the de facto leader of
Samsung. Earlier this year, JY Lee made a public
statement apologizing for all of his illegal behavior and
promised that he would be the final leader of Samsung
from the Lee family.

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