Samsung Electronics Co.
Samsung Electronics Co. started out with capital of KRW330 million and 36 employees in January 1969. It had revenues of KRW37 million and a loss of KRW7 million that first year, but last year reaped revenues of KRW138 trillion, operating profits of KRW11 trillion and net profits of KRW10 trillion. That means revenues soared more than 3.5 million times while commodity prices rose 50 to 60 times during the same period. It had 80,085 employees in South Korea at the end of last year. Including overseas employees at 196 units around the world, some of them at Samsung’s 39 production centers and 24 research institutes, its staff numbered 150,000 at the end of last year. It would be possible to populate a small city with Samsung employees alone.
Samsung Electronics also led South Korea’s efforts to become an information technology powerhouse. Twelve Samsung Electronics products, including liquid-crystal display televisions and DRAM chips are in the top spot in terms of global market share. According to a list compiled by consulting firm Interbrand in September, Samsung Electronics’ brand value stood at 19th among the world’s top 100 brands with a value of US$17.518 billion (KRW21.15 trillion). As of November 2, Samsung Electronics traded at KRW740,000 a share with a market capitalization of KRW110 trillion.
Hyundai Motor Co.
Hyundai Motor Co. started out ass-embling parts to produce the Ford Cortina under a technology transfer contract with Ford Motor Co. in December 1967. It produced its own model, the Pony, nine years after its founding in 1976. The company established a U.S. unit in 1985 and started exporting its Excel model the next year. It became a household name in South Korea with the success of the Grandeur and Sonata models, unveiled in 1987 and 1988 respectively, which topped the large and mid-sized sedan markets domestically.
It is accelerating its global management efforts by establishing overseas prod-uction hubs. Since it built its Turkey plant in 1997 (annual production capacity of 100,000 vehicles), it has followed up with a plant in India (600,000 vehicles) in 1998, a plant in China (600,000 vehicles) in 2002, a plant in Alabama, United States (300,000 vehicles) in 2005, a plant in Czechoslovakia (300,000 vehicles) in 2009 and a plant in Russia (150,000 vehicles) in September. As a result, Hyundai’s annual overseas production capacity has surpassed two million vehicles. Hyundai plans to complete its global production system by breaking ground for a plant in Brazil as early as this year.
Hyundai Motor, which began its foray into overseas markets in 1976 exporting its Pony models to Ecuador was for years the butt of jokes for its cheap workmanship, has seen its brand value soar. It now has a sales network of about 6,000 distributors in about 180 countries around the world. It sold 3,106,178 vehicles globally last year winning a market share of 5.2 percent.
LG Electronics Inc.
The history of LG Electronics Inc. is synonymous with the history of South Korea’s electronics industry. When LG was founded in 1958, the word ‘electronics’ itself was unfamiliar. Electronic goods at the time consisted of foreign-made radios and a small number of American-made televisions. In November 1959, one year after its founding, LG Electronics produced Korea’s first radio, the ‘A-501,’ widely considered to mark the birth of the country’s electronics sector.
In November 1962, LG Electronics made inroads overseas when it exported 62 radios to the United States. In December 1978 it became the first Korean appliance maker to achieve US$100 million in exports.
Ten years later, in October 1982, LG Electronics became the first domestic company to open an overseas production branch when it built a factory in Huntsville, Alabama.
The facility was in the media spotlight from the construction stage; The achievement is still regarded as a successful Korean business model and Harvard Business School adopted Huntsville as a case study. With the success of Huntsville, LG Electronics continued to expand its presence abroad and as of the end of last year, has 82 foreign subsidiaries.
In 1995, LG acquired Zenith Electronics based in Lincolnshire, Illinois. When word got out, appliance manufacturers worldwide were astonished and the acquisition made headlines across the United States.
Four years later in 1999, LG joined forces with Europe’s biggest appliance maker Royal Philips Electronics NV to produce liquid-crystal display panels. In 2001 the two also ventured into the cathode-ray tube business. And in 2006 LG became the first Korean electronics firm to open a production facility in Russia.
LG began with 300 employees; as of last year, it employed 82,000 workers in some 120 nations. Sales surged to KRW30 trillion last year from KRW50 million in 1959.
LG ranked seventh in the Top 50 most innovative companies in the world according to “Businessweek” magazine earlier this year.
Posco
Posco was founded as a state enterprise in 1968 under the goal of Korea becoming a self-sufficient steel producer. Three years after construction began on April 1,1970, Posco completed its first production line with a manufacturing capacity of 1.03 million tons of crude steel annually. After four expansion projects, annual production capacity increased to 9.1 million tons in 1983. Posco’s unexpected rise became a key driving force behind Korea’s surging economic growth.
In 1992, Posco repeated its legendary construction in southeast Korea by building another steel mill in the far south. It reclaimed land from the sea and completed a state-of-the-art plant that directly connected iron making, steelmaking and rolling,increasing annual production output to 21 million tons. Towards the end of the 1990s, Posco started working toward privatization.
After going public in October 2000, sales dipped. But Posco soon recovered and revenues started to increase rapidly from 2002. Sales, which hovered around KRW11 trillion for five straight years from 1998 to 2002, rose to KRW14.3 trillion in 2003 and KRW21.6 trillion in 2005. Last year, Posco posted sales of KRW226.9 trillion.
Posco also aggressively expanded its production base into overseas markets. In 2007 it purchased a steel mill in Malaysia. It is actively targeting the Southeast Asian market as Posco has also penetrated Thailand’s automotive steel plate market, a traditional stronghold of Japanese steel manufacturers.
In June of last year, Posco completed an automobile steel sheet manufacturing factory in Mexico with an annual production capacity of 400,000 tons. And last month, Posco held a ground-breaking ceremony in Cilegon, about 100km west of Jakarta, Indonesia. It constructed an integrated steel mill next to Indonesia’s state-owned Krakatau Steel. It marks the first integrated mill, capable of manufacturing complete steel products, that Posco has constructed abroad.
Hyundai Heavy Industries Co.
South Korea is a global leader in shipbuilding. The nation led global ship production for eight consecutive years from 2002 to 2009. The top five market leaders are all Korean. And at the forefront is Hyundai Heavy Industries Co.
HHI was founded in December 1973 and constructed its first shipyard in 1974. In 1983, 10 years after its founding, HHI grabbed 10.7 percent of global shipbuilding orders, overtaking Japan’s Mitsubishi Heavy Industries Ltd. as the number one shipbuilder in the world. HHI has built some 1,600 ships to date and remains the global leader.
In 1993, HHI expanded its business into engines and machinery, offshore plants, electrical engineering, construction equipment and industrial plants by acquiring Hyundai Electrical Engineering, Hyundai Construction Equipment, Hyundai Robot and Hyundai Steel Tower. Last year, sales from its non-shipbuilding businesses totaled KRW12 trillion.
In September 2000, HHI developed Korea’s first marine diesel engine and in November, began developing next-generation submarines. In April 2001, it built a floating production, storage and offloading, or FPSO, vessel. A year later in February 2002, it split from the Hyundai Group and established the Hyundai Heavy Industries Group. In 2004, HHI became the first shipmaker in the world to construct a ship using the on-ground build method, where the vessel is built on land instead of in a dry dock. It was a technical breakthrough that shattered predictions in the global industry.
HHI has also maintained its top position in marine engines since 1998, as it holds about 35 percent of the global market. One third of all large vessels in the world use engines made by HHI. Last month, its aggregate production of marine engines reached a record 100 million brake horsepower.
Hyundai is expanding its business into renewable energy. It agreed to establish a joint venture with France’s Saint-Gobain to build Korea’s largest thin-film solar cell factory.
By Hwang Jin-young
buddy@donga.com
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