Samsung Group

Samsung Group

Type	Publicly Traded
Genre	Original Equipment Manufacturer
Founded	1938 (Taegu, Korea)
Founder(s)	Byung-Chull Lee
Headquarters	Seoul, Korea
Area served	worldwide
Key people	Yoon Woo Lee (Vice Chairman and CEO); Chairman, Samsung Life Insurance (Lee Soo-Bin); President and CEO, Cheil Communications (Bai Dong-Man)
Industry	electronics
Products	digital media, telecommunications equipment, digital appliances, semiconductors, LCD
Employees	123,000 (2006)
Divisions	electronics, machinery, chemicals, financial services

Based in Korea with operations worldwide, Samsung is a major electronics producer, though it holds subsidiaries in other industries, as well. It held 12.5% of the market share for mobile phone handsets at year-end 2005, selling 25.7 million units in the third quarter of that year.

Company History

Samsung Group began as a general store in 1938, which was incorporate in 1941. Despite the Korean War and other historical disturbances, Samsung continued added different units to its holdings, including insurance, sugar production, and electronics. Samsung Group entered the electronics industry, now its most important line of business, in the 1970s. For information on the history of Samsung Electronics, see Funding Universe, "Samsung Electronics Company History"

Business Strategy

While many electronics manufacturers outsource production of their productions, Samsung produced 100% of its mobile phones "in-house" in 2005.

Political and Public Influence

Lobbying

As of July 2008, Samsung Group had spent $80,000 lobbying U.S. Congress, and in 2007 the total lobbying expenditures for the company reached $320,000 and $160,000 in 2006, hiring the lobbying firms Akin, Gump et al and Baker & McKenzie to represent its interests. By July of 2008, Samsung Group hired the lobbyists Steven Baker and Paul Horowitz (of Baker & McKenzie) and John Godfrey (Samsung Information Systems America) to represent their interests in Washington.

Corporate Accountability

Labor

In Shenzhen, Guangdong Province, Samsung produces mobile phone parts through its joint venture Kejian. While wages have increased an average of 15% in the Pearl River Delta, which includes Shenzhen, between 1994 and 2006, cost of living has increased 150%.Shenzhen is also one of China's many "special economic zones" (or SEZs), where the ACFTU, China's labor union, allows liberal labor conditions to prevail in order to promote the growth of export industries. The minimum hourly wage in this zone is $0.39 USD, actually higher than the $0.30/hour minimum wage outside the SEZ.

While Samsung does produce all of its mobile handsets in-house, many of the parts for these handsets are produced elsewhere. In the Micro-device facility in the Philippines which supplies Samsung, workers reported that conditions had improved from 2005 through 2006, and that medical care was available on-site, 8 days of sick leave per year provided, safety equipment was provided for workers using hazardous chemicals, working areas are generally clean and not dusty, and temperatures and lighting in work areas, while variable, were generally acceptable.

Samsung workers in India receive fixed wages not dependent on performance, unlike many other employees of mobile phone manufacturing plants in that country, who are often subject to subjective and arbitrary evaluations of performance by management. Despite this fact, however, workers in Samsung factories' wages, while slightly higher than comparable employees', do not cover their basic expenses, especially since many relocated in order to work at the Samsung production facility, increasing their costs of living by requiring them to find somewhere to stay while they worked. In addition, workers at Samsung facilities in India reported that they had been discouraged upon being hired from joining a union by management, and the facilities both remote and access to them limited, making organizing workers extremely difficult. Workers in Hungary are also discouraged from unionizing, both through explicit prohibition and because Samsung threatened to relocate in instances where workers began organizing.

Samsung is one of the major purchasers of electronics produced at the Lite-On Computer Technology production facility in Shijie Town, Dongguan Province, China (founded 1997). By early 2008, the facility employed about 5000 people who enter the company by paying agencies based in Shijie town, Dongguan, 500-600 yuan (for men) or 200 yuan (for women). While Lite-On production schedules follow a normal 8-hour workday, breaks consist of only 10 minutes twice a day and are unpaid – further, overtime work in the evenings, on weekends, and especially during busy seasons, is mandatory and can reach up to 100 hours a month, in violation of both Chinese Labor Law and the [EICC] standard. Basic wages at Lite-On complied with Chinese minimum wage laws (690 yuan/month in 2007), but until mid-to-late 2007 when overtime began being paid at twice the standard weekend rate (8.24 yuan/hour) the company violated overtime wage laws by paying over 2 yuan less per hour. A fire in the factory in February of 2008 has caused workers to be extremely concerned about their safety, and as of May 2008 production had not yet fully resumed at full capacity due to the damage the fire had caused. Workers are charged up to one quarter of their wages on food, electricity, and water for eating and living in the factory dormitories, which house up to 16 people per room. Research conducted by [SACOM] and [Bread for All] in early 2008 concluded that workers at Lite-On were unaware of their rights under either [EICC] standards or any of the codes of conduct of Lite-On’s customers, including Samsung.

Samsung purchases power supply devices including invertors, converters, and adapters from the Yonghong Electronics factory in Shenzhen. Yonghong is a member of the FSP Group and was founded in May 2000. In 2006, it was found to employ children under the age of 16, though by 2008 only workers of legal age were found to be working in the factory. Workers at the factory are forced to work up to 7 days a week and 100-200 hours of overtime a month, in clear violation of Chinese labor law. Exhaustion is a common problem amongst workers at the factory, and they are often paid wages below the legal minimum, especially probationary (new) workers. While some workers are paid the legal minimum wage of 750 yuan/month, the system in place to pay overtime wages does not pay for more than 3 hours of overtime a day, even though workers are forced to work longer in order to make the daily production quotas. Because of the repetitive nature of the factory work and the extreme long hours, besides exhaustion, workers suffer from repetitive motion injuries, and neck, shoulder, and back pain are common. The problem is exacerbated by the management policy that fines workers for moving their chairs from a yellow line painted on the floor to make all chairs placed in a straight line, a policy even worse for smaller employees who are not close enough to reach their work tables comfortably. Workers are not provided with hazard or safety training or face masks and inhale fumes produced by soldering. Workers at the Yonghong factory are not permitted to stop working there, despite the Chinese labor law code which allows for resignation with one-month prior notice. Employees complain that management refuses to look at their applications of resignation. Workers sleep in rooms with 12 people in the dormitories, and they expressed concerns to SACOM interviewers about the quality and cleanliness of the food provided to them.

Human Rights

Despite Samsung's Global Code of Conduct, investigation into its general supply chain monitoring process suggest it does little to implement its supposed commitments. Bellypoly Moulders and EIPPL, two of Samsung's consumer electronics suppliers operating in India, reported that Samsung failed to "put any conditions in terms of labour or others standards and that the only conditions were those surrounding the quality of the product," that workers work 12 hour shifts, that no labor inspections had ever been made (at Bellpoly).

A 2008 study demonstrated that Samsung, as well as several other major manufacturers of mobile phones, including Nokia, LG, and Motorola use cobalt mined in the Democratic Republic of Congo for the production of their mobile phones, thereby running the risk of supporting unfair labor practices in the mines and serious related human rights abuses. Despite the companies former claims that they could not trace the origins of cobalt and other minerals used in the production of their mobile handsets, the report demonstrates that supply chains are identifiable and notes that despite this information, none of the mobile phone companies have taken action to insure that their cobalt suppliers comply with their Corporate Social Responsibility initiatives.

Environment

EIPPL, in India, reported in 2006 "that environemental stardards were imposed and that they would not be enlisted as a vendor unless they were compliant with" them.

According to Greenpeace's "Guide to Greener Electronics", Samsung received a score of 5 out of a possible 10 with negative points being earned for the absence of BFR- or PVC-free models on the market and positive points being earned for a timeline which would result in the phasing out of BFRs by 2010, Samsung's take-back and recycling policy, and supporting IPR and serious analysis of obstacles to implementing it.

Anti-Trust and Tax Practices

Samsung's Indian subsidiaries have been accused of serious tax evasion and not complying with the Tax Deduction at Source for its Korean employees working in India, resulting in an amount estimated unpaid at $200 million USD. SOMO reports that, "Samsung has also been accused of evading the transfer pricing law, but Samsung argues that there has been an incorrect interpretation of the transfer pricing law and has appeled to the Commissioner of Income Tax."

Social Responsibility Initiatives

Samsung's "corporate citizenship" page provides information from the company regarding its social responsibility initiatives. The company's Global Code of Conduct has been criticized by SOMO: Centre for Research on Multinational Corporations and SACOM for being vague, especially in its commitment to comply with international codes and standards related to employee treatment without citing which standards to which it refers. Samsung has not signed the EICC, is not a member of the GeSI or The Global Compact, and does not refer to either labor or human rights but instead emphasizes "community-based projects" like supporting the arts and encouraging employees to do volunteer work. Samsung has, however, committed to comply with international environmental standards and works to limit its use of harmful production materials and chemicals, including those identified by the European RoHS directive. SOMO and SACOM's report, "The High Cost of Calling: Critical Issues in the Mobile Phone Industry, does criticize Samsung's environmental commitments, as well, for being ambitious but lacking clear steps the company intends to take to make its goals. Implementation of the Code was founding in SOMO's report to be highly limited, with environmental standards being imposed to some extent and labor and human rights being largely unenforced in Samsung production facilities where workers were unaware of the codes and quality of the product was the only standard emphasized.

Business Scope

Although most widely recognized for its electronics division, SAMSUNG is also involved in machinery manufacture, chemicals, financial services, and other industries. The increase in the importance of low-end handsets in the mobile phone industry caused in part by increased demand in developing regions has contributed to a decline in market share for Samsung which, unlike its competitors, manufactures 100% of its handsets in-house.

Subsidiaries

• SAMSUNG Electronics
• SAMSUNG Electro-Mechanics
• SAMSUNG SDI
• SAMSUNG SDS
• SAMSUNG Networks

• SAMSUNG Corning Precision Glass
• SAMSUNG Heavy Industries
• SAMSUNG Techwin

• SAMSUNG Total Petrochemicals
• SAMSUNG Petrochemicals
• SAMSUNG Fine Chemicals
• SAMSUNG BP Chemicals

• SAMSUNG Life Insurance
• SAMSUNG Fire & Insurance
• SAMSUNG Card
• SAMSUNG Securities
• SAMSUNG Investment Trust Management
• SAMSUNG Venture Investment
• SAMSUNG Corporation
• SAMSUNG Engineering
• Cheil Industries
• SAMSUNG Everland
• The Shilla Hotels & Resorts
• Cheil Communications
• S1 Corporation
• SAMSUNG Medical Center
• SAMSUNG Human Resources Development Center
• SAMSUNG Economics Research Institute
• SAMSUNG Lions
• The Ho-Am Foundation
• SAMSUNG Foundation of Culture
• SAMSUNG Welfare Foundation
• SAMSUNG Press Foundation

Electronics Production Subsidiaries

• Samsung Electronics Huizhou Company (SEHZ), Huizhou (China)
• Samsung Electronics Suzshou LCD Co., Ltd.
• Tianjin Samsung Electronics Company (TSEC), Tianjin China
• Suzhou Samsung Electronics Co., Ltd. (SSEC), Suzhou China
• Shenzhen Samsung Kejian Mobile Telecommunication Technology Co., Ltd. China
• Shandong Samsung Telecommunications Co., Ltd., Weihai China
• China Printed Board Assembly (TSED), Zhongshan China
• Tianjin Tongguang Samsung Electronics Company (TTSEC), Tianjin China
• Tianjin Samsung Telecom Communication (TSTC), Tianjin China
• Tianjin Samsung Electronics Display (TSED), Tianji China
• Samsung India Electronics Ltd. (SIEL), New Delhi India
• Samsung Telecommunications India Private Ltd. (STI), New Delhi India
• P.T. Samsung Electronics Indonesia (SEIN), Cikarang Indonesia
• Samsung Electronics Display (M) Sdn. Bhd. (SDMA), Seremban Malaysia
• Samsung Electronics (M) Sdn Bhd. (SEMA), Klang Malaysia
• Samsung Electronics Philippines Manufacturing Corp. (SEPHIL), Laguna Calamba Philippines
• Thai Samsung Electronics Co., Ltd. (TSE), Bangkok Thailand
• Samsung Vina Electronics Co., Ltd. (SAVINA), Ho Chi Minh City Vietnam
• Samsung Electronics Hungarian Co., Ltd. (SEH), Budapest Hungary
• Samsung Electronics Slovakia, S.R.O. (SESK), Glanta Slovakia
• Samsung Electronica Da Amazonia Ltda. (SEDA), São Paulo Brazil
• Samsung Electronics México (production) (SEM), Queretaro Mexico
• Samsung Méxicana S.A. de C.V. (SAMEX), Tijuana Mexico

Customers	Suppliers	Creditors	Competitors
Customer 1	Supplier 1	Creditor 1	Competitor 1
Customer 2	Supplier 2	Creditor 2	Competitor 2
Customer 3	Supplier 3	Creditor 3	Competitor 3
Customer 4	Supplier 4	Creditor 4	Competitor 4

Financial Information

Ticker Symbol:
Main Exchanges:Korea Stock Exchange (KSE)
Investor Website:http://www.samsung.com/us/aboutsamsung/ir/newsMain.do

Shareholder	% Total Shares held
Shareholder 1	% Held 1
Shareholder 2	% Held 2
Shareholder 3	% Held 3
Shareholder 4	% Held 4

Largest Shareholders

Geographic Scope

As of 2005, SAMSUNG allocated over 75% of its in-house production capacity to "low cost" countries, such as China, India, Brazil, Hungary, Mexico, and Vietnam. In China, Samsung's mobile phone manufacturing operations are located mainly in Northern China, in Tianjin Province, and in Guangdong Province in the South. Samsung began producing mid- and high-end handsets under its own brand in India in January of 2006 in Industrial Model Township, Manesar, Gurgaon, Haryana. Its facilities are generally assembly only in those areas.. Workers in Samsung's Indian productin facilities are generally 18-22 years old, have completed a 12th grade education, and are both men and women, though the gender composition of facilities varies greatly.Samsung began producing mid- and high-end handsets under its own brand in India in January of 2006 in Industrial Model Township, Manesar, Gurgaon, Haryana. Its facilities are generally assembly only in those areas..

Mobile Phone R&D Facility Locations

• Kyungki, Korea
• Yokohama, Japan
• Beijing, China
• Bangalore, India
• Staines, UK
• Texas, USA

Mobile Phone Production Site Locations

• Gumi, South Korea
• Tianjin, China
• Shenzhen, China (joint venture with Samsung Keijan
• Manaus, Brazil
• Tiajuana, Mexico
• India

Governance

• Vice Chairman, CTO, and Global Collaboration, Samsung Electr: Lee Yoon-Woo
• Chairman; Chairman, Samsung Life Insurance: Lee Soo-Bin
• President and CEO, Cheil Communications: Bai Dong-Man

Contact Information

250, 2-ga, Taepyung-ro, Jung-gu,
Seoul, 100-742, South Korea
Phone: +82-2-727-7114
Fax: +82-2-727-7985

Primary US Address
105 Challenger Rd.
Ridgefield Park, NJ 07660 United States
Samsung US "Contact Us" Page

Articles and Resources

External Articles

• "A Giant with Wings?" Business Korea, December 1994, pp. 21--23.

Jameson, Sam, "Samsung Isn't Content to Be a Mere Giant," Los Angeles Times, July 5, 1990, Sec. D, p. 1.

• Nakarmi, Laxmi, with Kevin Kelly and Larry Armstrong, "Look Out, World--Samsung Is Coming," Business Week, July 10, 1995, pp. 52--53.
• Ota, Alan K., "Samsung Expands Overseas in Drive to Transform Itself," Oregonian, July 2, 1995, Sec. F, p. 9.
• "Samsung Chairman Lee Kun-Hee: A Modern Day Fortuneteller?" Business Korea, August 1993, pp. 18--19.
• "Samsung Group: Lee Kun-Hee's First Five Years," Business Korea, December 1992, p. 37.
• "Samsung: Steering a New Course," Business Korea, February 1992, p. 26.

Selwyn, Michael, and Erwin Shrader, "Samsung Takes On the Giant," Asian Business, October 1990, pp. 28--34.

• Sohn, Jie-Ae, "Samsung Group Embracing Breathtaking Changes," Business Korea, August 1993, pp. 15--18.
• Steers, Richard M., with Yoo Keun Shin and Gerardo R. Ungson, The Chaebol, New York: Harper & Row, 1989.
• Tanzer, Andrew, "Samsung of South Korea Marches to Its Own Drummer," Forbes, May 16, 1988, pp. 84--89.

• Source: International Directory of Company Histories, Vol. 14. St. James Press, 1996.

Funding Universe "Samsung Electronics Company History" accessed July 2008