Speaker 1: Welcome to Tech Stuff, a production from iHeartRadio. Hey thereon
Speaker 1: Welcome to Tech Stuff.
Speaker 2: I'm your host, Jonathan Strickland.
Speaker 1: I'm an executive producer with iHeart Podcasts and how the
Speaker 1: Tech are you? It is a Friday, it is time
Speaker 1: for a classic episode. We're actually going to have a
Speaker 1: two parter, so part one will publish today and part
Speaker 1: two will publish next Friday. But this originally published back
Speaker 1: on May twenty fourth, twenty seventeen, and I gave it
Speaker 1: the imaginative title The Samsung Story Part one. Enjoy Now.
Speaker 1: Samsung's a Korean company. That means there's going to be
Speaker 1: a lot of Korean names that I am going to
Speaker 1: slaughter in this episode, and I sincerely apologize from the
Speaker 1: beginning at how I am going to butcher the pronunciation
Speaker 1: of these names. I'm going to do my best, but
Speaker 1: chalk it up to cultural ignorance, folks. I just don't
Speaker 1: have the experience with the Korean language to say all
Speaker 1: the names properly. Will I will try my hardest to
Speaker 1: do it, but I just want to make that clear
Speaker 1: because I know it's important, and I apologize for not
Speaker 1: being able to nail it. But it's largely just due
Speaker 1: to my lack of exposure to the Korean language. Now,
Speaker 1: Samsung was founded in nineteen thirty eight by Li Byong Chol,
Speaker 1: and originally it was a very modest company when it
Speaker 1: first started, but today it's a giant with more than
Speaker 1: one hundred and seventy billion dollars in revenue. So let's
Speaker 1: talk about its humble beginnings and how it first got started,
Speaker 1: because it was entirely different when it first when it
Speaker 1: was first founded. So here's another tricky thing about this company.
Speaker 1: To understand its rise, you also need to understand a
Speaker 1: little bit about the history of Korea, and this is
Speaker 1: an area of the world that I had not really
Speaker 1: studied that much. East Asia has not been one of
Speaker 1: the focuses of my studies, and so for a lot
Speaker 1: of this it was all new information to me, and
Speaker 1: it really displayed to me my depth of ignorance of
Speaker 1: East Asian history. But it is fascinating and it does,
Speaker 1: in fact tie into Samsung. It has a profound effect
Speaker 1: on the history of the company and even a motivation
Speaker 1: for the existence of the company in the first place.
Speaker 1: So we're going to look a little bit at world
Speaker 1: history before we get into the history of the company itself.
Speaker 1: Bear with me, because, like I said, it's fascinating and
Speaker 1: it's important so that you understand why the company is
Speaker 1: the way it is now. One thing that we have
Speaker 1: to keep in mind at the beginning is that when
Speaker 1: the company was founded. When Samsung was first founded, the
Speaker 1: Korean people were an occupied people. For centuries, Korea had
Speaker 1: been the center of power struggles between other nations. The
Speaker 1: Korean Peninsula is incredibly valuable for multiple reasons, and so
Speaker 1: a lot of different countries had interest in trying to
Speaker 1: control it, putting the Korean people in the middle as
Speaker 1: a result. In the nineteenth century, so the eighteen hundreds,
Speaker 1: the two main powers that were struggling over Korea were
Speaker 1: Japan and China. There was actually a war fought largely
Speaker 1: on the Korean Peninsula between Japan and China in eighteen
Speaker 1: ninety five, and the Japanese won the conflict and essentially
Speaker 1: eliminated China's interests in Korea. But Korea's queen formally well
Speaker 1: not formally casually really known as Queen Men and later
Speaker 1: known as Empress Myeong Seong, was hopeful that she would
Speaker 1: be able to entice Russia to support Korea against Japan,
Speaker 1: so there grew a new rivalry. You know, China was
Speaker 1: now fading away after losing to Japan in this conflict.
Speaker 1: There was a new rivalry between Japan and Russia, and
Speaker 1: Queen Men was hopeful that Russia would end up helping
Speaker 1: out Korea because she really didn't want Japanese influence infiltrating
Speaker 1: the country. She was technically the wife of the king,
Speaker 1: the last of a dynasty of kings in Korea, but
Speaker 1: had considerable influence. She was effectively a ruler in Korea
Speaker 1: and had put several of her most trusted advisors and
Speaker 1: relatives into high positions of power. She was also pretty
Speaker 1: well liked by a lot of the Korean populace, more
Speaker 1: so after the events I'm about to describe happened. So
Speaker 1: the government of Japan viewed Queen Men as an impediment
Speaker 1: to their plans, and they tried numerous times to instill
Speaker 1: a rebellion against her, to try and encourage aspects of
Speaker 1: the Korean government to oppose Queen Men and overthrow her,
Speaker 1: but they didn't really work. So the Japanese government worked
Speaker 1: with these various political rivals but didn't make a whole
Speaker 1: lot of progress, and they decided to take more drastic measures.
Speaker 1: So on October eighth, eighteen ninety five, Japanese ronan in
Speaker 1: other words, warriors for hire, working with some of Queen
Speaker 1: Men's rivals, were able to infiltrate her palace. The Ronan
Speaker 1: killed Queen Men. They assassinated her along with two other
Speaker 1: ladies in waiting, and they positively identified Queen Men as
Speaker 1: one of the three women. The fallout from this act
Speaker 1: was considerable. There were international pressures that forced the Japanese
Speaker 1: government to put the people who were involved in the
Speaker 1: assassination on trial. So the Japanese government did. They brought
Speaker 1: the people in, they gave them trials. However, all of
Speaker 1: the people were eventually acquitted due to lack of evidence
Speaker 1: according to the Japanese government, which did not go over
Speaker 1: well in the international community either. Within Korea itself, there
Speaker 1: was a growing sentiment that was anti Japanese. It had
Speaker 1: already been present, but now it was really flaring up
Speaker 1: in the wake of Queen Men's assassination. Things got really
Speaker 1: complicated from there, so complicated that it's really not my
Speaker 1: place to dive that deeply into the history, but it
Speaker 1: is important to know the basics so that you understand
Speaker 1: the rise of Samsung, and it also gives you insight
Speaker 1: into the Korean mindset and philosophy of the time. In
Speaker 1: eighteen ninety seven, King Gojong, who was husband to Queen Men,
Speaker 1: founded the Empire of Korea. So this was a new
Speaker 1: imperial line that he was attempting to establish in Korea. Now,
Speaker 1: he had sought refuge in Russia after his wife had
Speaker 1: been assassinated, but he had been pressured to return to Korea.
Speaker 1: The various governments around the world were saying that he
Speaker 1: needed to be there to establish this government or else
Speaker 1: Korea would be plunged into chaos. So he did return
Speaker 1: to Korea and ended up giving Queen Men her title
Speaker 1: of Impress posthumously. Japan continued its efforts to expand into
Speaker 1: East Asia, and then there was the Russo Japanese War,
Speaker 1: the war between Russia and Japan, which waged from nineteen
Speaker 1: oh five or nineteen oh four to nineteen oh five. Sorry, now,
Speaker 1: the Japanese military won some key victories there and then
Speaker 1: really started to put pressure on Korea. As a result,
Speaker 1: they compelled the emperor to sign the Protectorate Treaty of
Speaker 1: nineteen oh five, which made Korea a protectorate of Japan.
Speaker 1: Now that largely stripped Korea of its nation status. It
Speaker 1: was technically a nation, but really only in Nane. It
Speaker 1: was more of an extended property of Japan at this point,
Speaker 1: and in nineteen ten, Japan went ahead and formally annexed
Speaker 1: the Empire of Korea. So over the next decade, from
Speaker 1: about nineteen ten to about nineteen nineteen, Japan forces subjugated
Speaker 1: Korea using force and severely restricting the rights of Koreans
Speaker 1: as a result. That particular era ended in nineteen twenty
Speaker 1: because the Japanese emperor was shocked when Koreans were able
Speaker 1: to organize mass, coordinated protests across the entirety of Korea,
Speaker 1: and the emperor realized if things didn't change, so he
Speaker 1: was going to have a full scale rebellion in Korea
Speaker 1: and did not want that to happen. So at that
Speaker 1: point Japan started to ease back on some of these
Speaker 1: restrictions and things got a little less tense in Korea.
Speaker 1: The reason why I tell you all this about this
Speaker 1: era between nineteen ten and nineteen twenty is that on
Speaker 1: February twelfth, nineteen ten, leb yung chull, the founder of
Speaker 1: Samsung was born. So he was born shortly well, right
Speaker 1: around the time that Japan was formally occupying Korea, so
Speaker 1: this is a very tumultuous time in Korea's history. Now,
Speaker 1: his family were well off and so he was in
Speaker 1: a better position than a lot of his fellow Koreans.
Speaker 1: He was from a wealthy family. They were landowners and
Speaker 1: they made their money through being landlords. They would rent
Speaker 1: out their property to other people. Now, Leb yung choll
Speaker 1: would study in local Korean schools before or he would
Speaker 1: go off to Tokyo to attend Waseda University. But his
Speaker 1: father passed away while he was in school, and so
Speaker 1: he ended up dropping out of college to return home
Speaker 1: to Korea and take over the family business, so he
Speaker 1: never earned his degree. That family business at the time
Speaker 1: was running a rice mill as well as being the
Speaker 1: overseer of these landlord properties, and the rice mill saw
Speaker 1: a lot of success. But at that time, Leeb young
Speaker 1: chol began to feel a greater ambition something more important
Speaker 1: than running a successful business. He wanted to do more
Speaker 1: than that.
Speaker 2: We'll be back with more of the Samsung story after
Speaker 2: this quick break.
Speaker 1: We're going to skip ahead now to nineteen thirty eight.
Speaker 1: So in this time he's running the business everything successful.
Speaker 1: He feels like Korea really needs something to help inspire
Speaker 1: the people and to jumpstart the economy of Korea itself
Speaker 1: because it was so dependent upon Japan, and that was
Speaker 1: something that was of great concern to Koreans. So the
Speaker 1: country had been under Japanese occupation for nearly three decades
Speaker 1: at this point in nineteen thirty eight, and since nineteen
Speaker 1: thirty one the Japanese rule had become more restrictive. So
Speaker 1: nineteen twenty nineteen thirty one things had eased up a bit,
Speaker 1: but from nineteen thirty one up to nineteen thirty eight
Speaker 1: they had gotten worse again. This was called the Assimilation period,
Speaker 1: in which Japan was effectively trying to wipe out Korean
Speaker 1: culture and make Korea essentially just part of Japan, officially
Speaker 1: part of Japan, and really exploiting Korea's resources as well. Now,
Speaker 1: Li Byong Chol wanted to make a difference. He wanted
Speaker 1: to create a successful business that Korea could call its
Speaker 1: own and create an industry where one had not existed before.
Speaker 1: The Japanese occupation had brought a couple of positive things
Speaker 1: to Korea, including industrialization and modernization, two things the country
Speaker 1: was far behind in compared to the rest of the
Speaker 1: world in general, in East Asia in particular. But as
Speaker 1: a Resultan Koreans were paying an incredibly high price. They
Speaker 1: were under restrictive rule, and the Japanese government and Japanese
Speaker 1: occupying forces were taking great liberties and exploiting people in
Speaker 1: horrible ways that I'm not going to go into here,
Speaker 1: but it was not great. Lee Byung chull was hoping
Speaker 1: that he could leverage the advances that the Japanese had
Speaker 1: brought with them and turn them to Korea's advantage and
Speaker 1: to truly have Korea emerge into the twentieth century as
Speaker 1: a power player. There was a long long way to go,
Speaker 1: so to pursue this, he decided to sell off the
Speaker 1: rice mill and to invest in a new company, and
Speaker 1: on March first, nineteen thirty eight, he founded the Samsung
Speaker 1: Trading Company. The initial investment, according to multiple sources, was
Speaker 1: about twenty seven dollars at the time. That's how much
Speaker 1: the founding Samsung Trading Company costs twenty seven bucks. That
Speaker 1: was thirty thousand and one, which is the Korean currency
Speaker 1: WN the one. If we throw twenty seven dollars into
Speaker 1: an inflation calculator and adjust for inflation from nineteen thirty
Speaker 1: eight to modern day, you would get somewhere in the
Speaker 1: neighborhood of four hundred and sixty dollars. But we have
Speaker 1: to keep in mind that this is not a apples
Speaker 1: to apples thing. Whenever we're doing currency conversions and inflation comparisons,
Speaker 1: we have to make a lot of assumptions. So let's
Speaker 1: just say founded Samsung with an initial investment that was
Speaker 1: somewhere in the neighborhood of five hundred bucks. So imagine
Speaker 1: saving up five hundred dollars and then founding a company.
Speaker 1: That's essentially what he managed to do back in nineteen
Speaker 1: thirty eight. As the company started to form, he hired
Speaker 1: on people, and initially the company had about forty employees.
Speaker 1: Now the company's name Samsung means literally in Korean three stars.
Speaker 1: The number three has significance in Korean culture. It often
Speaker 1: is associated with something that is really momentous or really
Speaker 1: strong and powerful, and the motto of the company is
Speaker 1: be great, strong, and everlasting, which seems like a pretty
Speaker 1: tall order, but the company's done pretty well since then.
Speaker 1: Its initial business was selling common goods and transporting products
Speaker 1: across Korea and into China, so it was essentially a
Speaker 1: grocery store and a trucking company when it first started.
Speaker 1: That's what Samsung's business was was groceries and transportation. A
Speaker 1: lot of company origin stories when they talk about Samsung
Speaker 1: say that it was essentially dealing in dried fish, which
Speaker 1: in fact was one of the main products that they
Speaker 1: carried was dried fish Korea. That was a major product there.
Speaker 1: But I think it oversimplifies the position that Samsung was in.
Speaker 1: I think a lot of people like to use that
Speaker 1: as a descriptor because they juxtapose that humble origin of
Speaker 1: Samsung being a company that sold dried fish and transported
Speaker 1: it into China to Samsung the multinational global electronics company,
Speaker 1: the giant that it is today, and I think that
Speaker 1: under sells what actually was happening. If I'm being honest,
Speaker 1: it's more of a store. Worry about a businessman who
Speaker 1: was trying to push against opposition in order to establish
Speaker 1: a new sense of identity within Korea. This was a
Speaker 1: country that had been the subject of interference from multiple
Speaker 1: countries for much of its history, and in fact, for
Speaker 1: the next several decades would still be the subject of
Speaker 1: a lot of foreign meddling. And so here was an
Speaker 1: attempt by a Korean citizen to say, let's make our
Speaker 1: own name and not have Korea be this extension of
Speaker 1: some other countries identity. And this is a big deal.
Speaker 1: But it is true that Samsung's early history had little
Speaker 1: to do with technology, apart from leveraging modern transportation conveniences
Speaker 1: like motorized trucks, which were pretty new to Korea at
Speaker 1: that time. The company saw success in its early years,
Speaker 1: so they did pretty well. The Japanese occupation of Korea
Speaker 1: ended in nineteen forty five when Japan surrendered at the
Speaker 1: end of World War Two, and at this point Korea
Speaker 1: was again in a time of turmoil. Japan's withdrawal from
Speaker 1: Korea didn't mean everything was hunky dory. In fact, things
Speaker 1: got really complicated. In theory, Korea was a single independent country,
Speaker 1: but in practice that really wasn't the case. The United
Speaker 1: States and Russia, both or the Soviet Union, both had
Speaker 1: interests in Korea and decided to essentially divide up the country.
Speaker 1: So everything above the thirty eighth parallel that's what Russia
Speaker 1: was looking at, and everything below that, that's what the
Speaker 1: United States was looking at. And a new leader named
Speaker 1: Lee Sung Man rose to take control of what would
Speaker 1: eventually become South Korea. And he wasn't the leader that
Speaker 1: all Koreans or even most Koreans necessarily preferred, but he
Speaker 1: had the support of the United States, largely because he
Speaker 1: was a staunch anti communist. So it wasn't a true republic.
Speaker 1: The people of Korea didn't get to vote on Li
Speaker 1: Sungman establishing control. He was essentially instilled as leader by
Speaker 1: the United States. Now, meanwhile, again the Soviet Union was
Speaker 1: looking at the northern part of Korea, and the Soviet
Speaker 1: Union established its own leadership that was totally separate from
Speaker 1: this leadership in South Korea, which, as you would imagine,
Speaker 1: caused a little bit of friction. Both governments, both the
Speaker 1: one in the northern section of the country and the
Speaker 1: one in the southern section of the country, claimed leadership
Speaker 1: across the entire nation. So you have two different governments
Speaker 1: both claiming to be the leader of Korea overall. Now,
Speaker 1: technically the United States and the Soviet Union had joint
Speaker 1: trusteeship overall of Korea. And technically they were supposed to
Speaker 1: come to an agreement as to what the government of
Speaker 1: Korea would be following its release from Japan, and then
Speaker 1: from that point forward, theoretically the people of Korea would
Speaker 1: have a say in how their government was formed. But
Speaker 1: that never happened because the Soviet Union in the United
Speaker 1: States didn't see eye to eye. They completely disagreed with
Speaker 1: each other's choices, and so this leadership question became a stalemate. Now,
Speaker 1: at the same time, Lee Byung chung wanted his company
Speaker 1: to reinvest in Korea and that was continuing to struggle
Speaker 1: in the wake of World War Two and the interests
Speaker 1: of the United States and the Soviet Union. So in
Speaker 1: nineteen forty eight, he founded the Samsung Construction and Trading
Speaker 1: Corporate or Samsung C and T. Now, this would eventually
Speaker 1: become the parent company of all the other Samsung companies,
Speaker 1: at least for a while, and so Samsung C and
Speaker 1: T became kind of like the top notch company under
Speaker 1: which all the others would fall. And often you'll see
Speaker 1: that the founding date for Samsung C and T is
Speaker 1: nineteen thirty eight, although really that was the Samsung Trading Company,
Speaker 1: the Samsung C and T was sort of the transformation
Speaker 1: of that company. So I guess it really just depends
Speaker 1: on your perspective as to whether or not you would
Speaker 1: call the founding of it being nineteen thirty eight when
Speaker 1: the initial company started, or nineteen forty eight when they
Speaker 1: formally created the organization known as Samsung C and T.
Speaker 1: This gets way more complicated the longer I go, So
Speaker 1: if you think that part is a little confusing, I apologize.
Speaker 1: It's not going to get any easier to understand. In fact,
Speaker 1: it gets really messy when we get up into the eighties,
Speaker 1: nineth these and the two thousands for Samsung's history. Now,
Speaker 1: another big thing happened in nineteen forty eight. That's the
Speaker 1: same year that Korea officially split into two nations. Remember
Speaker 1: I mentioned you had these two different governments that were
Speaker 1: in opposition to each other, both laying claim to the
Speaker 1: entire Korean country, and that could not sustain itself. In
Speaker 1: the South, Singhman Ri established the Republic of Korea, and
Speaker 1: in the North Kim Il sung became the leader of
Speaker 1: the Democratic People's Republic of Korea. The United Nations only
Speaker 1: recognized the Republic of Korea. The South Korean government as
Speaker 1: being legitimate. Meanwhile, the Northern Korean government began seizing companies
Speaker 1: and properties that were originally owned by Japanese or pro
Speaker 1: Japanese interests, and then claiming those companies for the state,
Speaker 1: so they were state owned and operated. At that point
Speaker 1: they had been seized by four Tensions between North and
Speaker 1: South Korea increased, with each planning to use military force
Speaker 1: against the other in order to reunite the country under
Speaker 1: one government. Now, at this time, Samsung had established a
Speaker 1: new headquarters building in Seoul, but in nineteen fifty, North
Speaker 1: Korean forces invaded South Korea and the two nations officially
Speaker 1: entered the Korean War. At that point, Samsung relocated its
Speaker 1: base of operations to Busan. Seoul eventually would fall to
Speaker 1: North Korea, but it would eventually also be returned back
Speaker 1: to South Korea once the two countries negotiated peace, and
Speaker 1: at the conclusion of the war, Samsung would return to
Speaker 1: Seoul as its base of operations. Now, I've got a
Speaker 1: lot more to talk about once we've gotten to this
Speaker 1: point where things are a little more steady for Samsung.
Speaker 1: But before I do that, let's take a quick break
Speaker 1: to thank our sponsor by nineteen fifty one, Korean War
Speaker 1: is now technically over. Things would continue to fall out
Speaker 1: until nineteen fifty three. But nineteen fifty one, Samsung was
Speaker 1: pulling in revenues of two billion one By today's exchange rate,
Speaker 1: that's about one point seventy five million dollars. But keep
Speaker 1: in mind that, you know, like I said earlier, when
Speaker 1: you talk about currency conversions and adjusting for inflation and
Speaker 1: that sort of thing, there are a lot of factors
Speaker 1: that are present that you can't necessarily account for easily.
Speaker 1: So just think of that as like a round number
Speaker 1: somewhere around two million dollars in revenue, which was a
Speaker 1: significant amount for a brand new company. I mean brand
Speaker 1: new in the sense of this. Korea had no real
Speaker 1: corporations that were of any real significance around the time.
Speaker 1: It had some industries, it had some companies, don't get
Speaker 1: me wrong, but Samsung was trying to establish a brand
Speaker 1: new era in the post industrial world of Korea, which
Speaker 1: underwent industrialization very rapidly and under Japanese occupation. It's just
Speaker 1: important to know that the company had been successful even
Speaker 1: in the wake of the Korean War. Now, during this time,
Speaker 1: the company expanded its operations by purchasing other businesses and
Speaker 1: getting into new industries. In other words, they were diversifying.
Speaker 1: It wasn't just groceries and transportation. So was it consumer electronics.
Speaker 1: Not yet. It'd be a long time before they would
Speaker 1: actually get into consumer electronics. But this was in part
Speaker 1: an effort to get Korea independent of imports. Korea was
Speaker 1: importing tons of stuff, and Samsung leadership said, what if
Speaker 1: we were able to produce these things within Korea so
Speaker 1: that we removed that dependence upon other countries and grew
Speaker 1: the economy of Korea as a result. It was a
Speaker 1: way of trying to stand on their own. So the
Speaker 1: new industries included a sugar refinery and a woolen mill.
Speaker 1: And since it's going to be a while before consumer
Speaker 1: electronics enters the picture, we're going to talk about how
Speaker 1: those work because they involve technology. So we're going to
Speaker 1: talk about sugar refineries and woolen mills now, because I thought,
Speaker 1: why not, it's the perfect opportunity. We'll start with sugar refineries. Now,
Speaker 1: the purpose of these buildings, these manufacturing plants, these factories
Speaker 1: is to purify or refine sugar. So, in other words,
Speaker 1: this is all about getting rid of impurities to create
Speaker 1: a pure and consistent product that table sugar type stuff
Speaker 1: granulated sugar. Now, there are actually two types of facilities
Speaker 1: you would use with your typical sugar refinery if you're
Speaker 1: using cane sugar. The first is a raw sugar mill,
Speaker 1: which turns plant sugars into a raw form of sugar
Speaker 1: that you can find in many stores or if you've
Speaker 1: ever seen that golden sugar that you can use in
Speaker 1: different places. A lot of trendy coffee shops use this
Speaker 1: raw sugar. That's what comes from sugar mills. But you
Speaker 1: would also take this raw sugar and you could give
Speaker 1: it to a sugar refinery which will further refine the product.
Speaker 1: And that's where you get the white sugar that is
Speaker 1: free of various impurities. So sugar starts off as sucrose.
Speaker 1: It's a carbohydrate that you would find in plants, and
Speaker 1: it's a byproduct or actually a product of photosynthesis. That's
Speaker 1: the process by which plants take energy from the sun
Speaker 1: and they produce food that they can use for their
Speaker 1: own energy later on. Now, I'm not going to go
Speaker 1: into the whole plant cycle here, because I assume you've
Speaker 1: been through elementary biology. But just understand that plants take water, minerals,
Speaker 1: carbon ditide, and sunlight and end up producing, among other things, sucrose,
Speaker 1: which eventually will undergo further transformations to become stuff like
Speaker 1: plant matter, fibers, complex starches, that kind of thing. Now,
Speaker 1: all green plants produce sugars, but some do it in
Speaker 1: higher concentrations than others and thus make a better product.
Speaker 1: Our better crop for you to grow if you want
Speaker 1: to harvest sugar, and sugar cane is about twelve to
Speaker 1: fourteen percent sucrosse, which is why we grew so much
Speaker 1: of the darn stuff a few hundred years ago. It's
Speaker 1: a really good crop to raise if you wanted to
Speaker 1: produce sugar or molasses, that kind of thing. Now, there
Speaker 1: are other plants that we use to harvest sugar, such
Speaker 1: as sugar beets, and the process is similar to getting
Speaker 1: sugar from cane sugar, but they're not exactly the same.
Speaker 1: They're close, but not one hundred percent identical. However, I'm
Speaker 1: gonna focus on cane sugar just for simplicity, So since
Speaker 1: I just want to talk about the technology and process
Speaker 1: of purifying and refining sugar, so to get sugar from sugarcane.
Speaker 1: You have to wash the stalks and then you have
Speaker 1: to shred the stalks turn it into kind of a pulp,
Speaker 1: and typically raw sugar mills use a contraption with rotating
Speaker 1: knives to do the trick. So it helps if you
Speaker 1: imagine that the sugar cane is a little James Bond
Speaker 1: and the rotating knives are the villain's method of torture
Speaker 1: in order to get information now in James Bond, except
Speaker 1: in this case, James Bond does not make a daring
Speaker 1: escape and then romance some other stalk of sugar. Instead,
Speaker 1: they get shredded, which I guess would make an exciting
Speaker 1: but short James Bond movie, and that's why they don't
Speaker 1: let me write screenplays. Anyway, you end up with shredded sugarcane,
Speaker 1: which you then wash thoroughly again and you put it
Speaker 1: through a pair of very heavy rollers to squeeze all
Speaker 1: that sugar out. Essentially, ju u is this pulp, so
Speaker 1: it squishes everything down. You get this cloudy sugary juice
Speaker 1: as a result, and you need to be able to
Speaker 1: remove stuff from that cloudy liquid in order to refine
Speaker 1: the sugar. So your next step is to make clarified solution.
Speaker 1: And you create the clarified mixture by adding in carbon
Speaker 1: dioxide and something called milk of lime. Now that's lime,
Speaker 1: as in the mineral lime, not the fruit. So in
Speaker 1: other words, you're using a diluted solution of calcium hydroxide
Speaker 1: and a source of carbon dioxide. Why well, when you
Speaker 1: mix these components together and you bubble carbon dioxide through it,
Speaker 1: so it's essentially a carbonation process, it begins to form
Speaker 1: calcium carbonate. And this stuff is kind of like chalk,
Speaker 1: and it ends up sucking up a lot of materials
Speaker 1: that you don't want in your sugars, like fat and
Speaker 1: gum and wax. That kind of stuff pulls that out
Speaker 1: of the solution. Now, those materials end up being heavier
Speaker 1: than the solution itself, so they all settle at the bottom.
Speaker 1: That way, you can just harvest the liquid from the top.
Speaker 1: Then you take the clarified juice and you put in
Speaker 1: a vacuum pan, So it's a pan that's actually subjected
Speaker 1: to vacuum to reduce pressures. Now by reducing the pressure,
Speaker 1: you also reduce the temperature you need to boil off liquid,
Speaker 1: which is exactly what you want to do. You want
Speaker 1: to start boiling off the water that's inside this solution
Speaker 1: to concentrate it, or you're making a concentrate. As this happens,
Speaker 1: the mixture turns into a thick, brown, rich syrup, and
Speaker 1: this is the concentrated form of that sugar juice. Now
Speaker 1: you still need to convert the syrup into sugar crystals.
Speaker 1: So typically you'd put this in another vacuum pan subjected
Speaker 1: to another vacum and you would also add some pulverized
Speaker 1: sugar crystals to act as sort of nucleic sites for
Speaker 1: raw sugar crystals to form around them. Think of it
Speaker 1: kind of like a rain cloud. Rain Drops form around
Speaker 1: tiny particles. It acts as a nucleic site for the
Speaker 1: moisture to form around the particle, and then it gets
Speaker 1: heavy enough to fall from the sky in the form
Speaker 1: of precipitation. Similar concept here, except instead of it being
Speaker 1: droplets of water, we're talking about crystals of sugar. It's
Speaker 1: just a little bit of lattice for the crystals to
Speaker 1: start forming around. So you get these sugar crystals glomming
Speaker 1: onto these nucleic sites as the water begins to boil off,
Speaker 1: and you're not done yet. You then would take this
Speaker 1: mass of crystals and you would put them into a centrifuge,
Speaker 1: and this kind of looks like a clothes dryer. It
Speaker 1: is a cylindrical container that's got perforated sides and it
Speaker 1: can spin very very quickly, and it slings more moisture
Speaker 1: outside of it while retaining all the crystals. You end
Speaker 1: up with raw sugar, which is kind of this golden
Speaker 1: color I was talking about. So that golden color is
Speaker 1: because the sugar crystals have a thin layer of a
Speaker 1: substance that we call molasses on them. So raw sugar
Speaker 1: has molasses around those those raw sugar crystals. If all
Speaker 1: you want is raw sugar, this is where you stop.
Speaker 1: Otherwise you then have to move on to the sugar refinery.
Speaker 1: So since Samsung had a sugar refinery, I guess I
Speaker 1: should explain how this works. Let's keep this sweet train
Speaker 1: a rollin. The typical sugar refinery takes in raw sugar
Speaker 1: from the mills, and first thing they do is they
Speaker 1: put the raw sugar in a mixture of water and sugar.
Speaker 1: This actually helps them separate the molasses from those raw
Speaker 1: sugar crystals. So you end up with a batter like
Speaker 1: substance called magma, the lish magma, and I am not
Speaker 1: making that up. That is actually the term for it.
Speaker 1: I do urge you to be careful if you're ever
Speaker 1: offered a sample of magma to taste, make sure you
Speaker 1: know which type of magma it is. The tasty, sweet
Speaker 1: kind is fine, but the kind that's underneath the Earth's
Speaker 1: crust is probably bad for you. Next, you put this
Speaker 1: magma into another centrifuge lots of centrifuges and water involved
Speaker 1: in this process, and you give it another spin. Now,
Speaker 1: this separates the molasses film from the crystals, so you
Speaker 1: can collect the molasses and you can sell that, which
Speaker 1: is great. It means that you can make use of
Speaker 1: a byproduct of the process of refining sugar, and it
Speaker 1: means that you have less waste. You're not just throwing
Speaker 1: the molasses away. You can actually sell that as another product,
Speaker 1: and it's more efficient, more effective use of the material.
Speaker 1: I'm in favor of it. Also, I like various desserts
Speaker 1: that are made with molasses because I'm from the South
Speaker 1: and they were very popular. Now, the remaining crystals go
Speaker 1: through a filtering process to remove any other impurities. It's
Speaker 1: still in liquid form in this point, so you're still
Speaker 1: talking about liquid sugar. You pass it through various filters.
Speaker 1: The color is golden until you pass it through some
Speaker 1: carbon filters, which removes that last bit of color, and
Speaker 1: you end up with the water white sugar syrup. Then
Speaker 1: you evaporate some more of the water to concentrate the
Speaker 1: mixture further. You put that mixture in another vacuum pan.
Speaker 1: You seed it with some crushed sugar crystals, and you
Speaker 1: allow the sugar, the granulated sugar to form. Then you
Speaker 1: put that mixture in yet another centrifuge, and then the
Speaker 1: crystals are washed with fresh hot water moved to dryers.
Speaker 1: You actually put this wet sugar in a dryer and
Speaker 1: the dryers will remove almost all the water, almost all
Speaker 1: the liquid and moisture from the sugar granules. They'll go
Speaker 1: from having about a one percent moisture content to point
Speaker 1: zero three percent moist your content. It's pretty phenomenal. Then
Speaker 1: you pass these crystals over a series of screens to
Speaker 1: separate the different sizes of grains of sugar, and then
Speaker 1: you got it. That's how sugar refineries work. You end
Speaker 1: up with the refined sugar at the end of it,
Speaker 1: at least for cane sugar. Like I said, beat sugar
Speaker 1: is slightly different, but not by a whole lot. But hey,
Speaker 1: I also mentioned woolen mills besides sugar refineries, and how
Speaker 1: do they work. We're going to talk about that for
Speaker 1: a second now, only briefly, because I also covered mills
Speaker 1: when I talked about them in the Industrial Revolution podcasts.
Speaker 1: So if you've listened to those, you know a little
Speaker 1: bit about how these work already, and if you haven't
Speaker 1: listened to those, I recommend it. It was a lot of
Speaker 1: fun for me to go and explore the history of
Speaker 1: the Industrial Revolution, which is a fascinating era in world history. Now.
Speaker 1: Broadly speaking, a woolen mill it takes animal fiber, typically wool,
Speaker 1: and turns into the useful stuff like yarn and felt.
Speaker 1: The mills allow for mass production of these products, which
Speaker 1: is something you couldn't really do before the Industrial Revolution.
Speaker 1: You could only produce stuff by hand, which obviously limited
Speaker 1: how much you could create at any given time. Typically,
Speaker 1: you start by washing the fibers. So you've got wool
Speaker 1: that's been harvested from sheep or so, I am told,
Speaker 1: give it a good wash. And then you end up
Speaker 1: taking the washed wool where you've gotten rid of as
Speaker 1: much dirt and grease and other stuff as you possibly can,
Speaker 1: and you then put it through a device called a
Speaker 1: picker or an opener. This is to remove tangles from
Speaker 1: the fibers. Also helps you open up the fibers so
Speaker 1: you can work with them and ensure consists and see
Speaker 1: as you work with the wool. Typically, the way these
Speaker 1: machines work is they have a conveyor belt on them.
Speaker 1: You put the raw wool on the conveyor belt, it
Speaker 1: pulls it toward the rest of the machine. And then
Speaker 1: we get into another kind of James Bond torture device,
Speaker 1: or maybe Indiana Jones if you prefer. Temple of Doom
Speaker 1: had that giant rock crusher. It's kind of similar to that,
Speaker 1: except imagine rollers that have a set of teeth on them.
Speaker 1: There's actually a couple different sets of rollers. The first
Speaker 1: set has small teeth that are meant to open and
Speaker 1: untangle the fibers. Then there's that set, by the way,
Speaker 1: is called lickers. I'm not making that up. Liquors are
Speaker 1: the rollers that fine teeth and start to open up
Speaker 1: the fibers on wool that leads to a drum that
Speaker 1: has larger teeth on it. This one is called a picker.
Speaker 1: So you go with the liquors and then you go
Speaker 1: to the pickers. By the way, if you really want
Speaker 1: to encounter some fun words, research wool mills because they
Speaker 1: have a language all unto themselves, and it's mostly fanciful stuff.
Speaker 1: In fact, the word fancy features heavily in wool mills.
Speaker 1: So once it passes through the liquor and the picker,
Speaker 1: the fiber is ready to have some conditioner added to
Speaker 1: it to make it a little more pliable and workable,
Speaker 1: and you move it to a separate device, the separator.
Speaker 1: The separator is meant to remove impurities like plant matter
Speaker 1: from the fibers, so stuff that didn't get removed from
Speaker 1: the initial washing. Some fibers need more than one pass
Speaker 1: through a separator in order to get the majority of
Speaker 1: the stuff out, so you might put it through a
Speaker 1: couple of times. The device also rolls and picks the fibers,
Speaker 1: with these impurities falling into the base of the machine,
Speaker 1: so you would just empty out the container occasionally when
Speaker 1: it would start to fill up. Now following that is
Speaker 1: another machine called a carter crder. Carding is all about
Speaker 1: aligning fibers properly, getting them all to line up in
Speaker 1: the same direction, so you want them parallel to one another,
Speaker 1: and you can do this by hand by using a
Speaker 1: pair of carters, which are sort of like specialized brushes.
Speaker 1: If you've ever used a brush that has metal teeth
Speaker 1: for combing in animals fur, specifically to help it when
Speaker 1: it's shedding, like if you have a dog that has
Speaker 1: an undercoat and you need to get that undercoat. Typically
Speaker 1: you would use a brush that has metal teeth to
Speaker 1: help grab onto those fibers and gently pull them away.
Speaker 1: Same sort of thing is used in carters, so you'd
Speaker 1: use a pair of these by hand. If you want
Speaker 1: to do it by hand and put some wool on
Speaker 1: one of the carters, use the other carter to gently
Speaker 1: pull the fibers, gently being the operative term because if
Speaker 1: you use too much force, you're just going to stick
Speaker 1: the two things together and you'll never move them apart.
Speaker 1: And as you do this, all the fibers start to
Speaker 1: line up in parallel. That makes it much more easy
Speaker 1: to work with when you want to do something like
Speaker 1: spin that wool into yarn. Well, the machines do this automatically.
Speaker 1: You've got another conveyor belt. You have a thing called
Speaker 1: the swift, which is got one set of teeth on it,
Speaker 1: and then you have the card, which has the other
Speaker 1: set of teeth on it, and by having one pull
Speaker 1: the other, or pull the wool against the other, you
Speaker 1: align all the fibers. This happens a couple of different ways,
Speaker 1: depending upon the actual machine, but at the end you
Speaker 1: get a thin web of wool where all the fibers
Speaker 1: are aligned properly, and you can then use that for
Speaker 1: whatever purpose you were planning. Further down. The description of
Speaker 1: a typical carter cracks me up because this is where
Speaker 1: we run into some of those terms I was talking about.
Speaker 1: It has stuff on it like a swift, a fancy,
Speaker 1: and a doffer, But the important thing to remember is
Speaker 1: that it's just about aligning the fibers properly. Now, the
Speaker 1: next step is dependent upon what you want to do
Speaker 1: with the wool once you've gotten to this point. If
Speaker 1: you're turning it into beelt, you have to convert the
Speaker 1: fibers into bats that's bat with two teas, or you
Speaker 1: can convert the fibers into rough yarn or something called
Speaker 1: roving or bumps. Otherwise you would have to draw the fibers,
Speaker 1: spin them into a finer yarn, ply that yarn, and
Speaker 1: then either wind it onto cones or process it a
Speaker 1: little bit more and then eventually turn it into skeins
Speaker 1: of yarn. And honestly, I'm left wondering how anyone ever
Speaker 1: figured out these processes in the first place, because none
Speaker 1: of them seem at all intuitive to me. If it
Speaker 1: were up to me, we'd all be wearing mud and leaves,
Speaker 1: because that's as advanced as I would be able to get.
Speaker 1: This stuff is like rocket science to me, or maybe magic,
Speaker 1: or a combination of the two. All Right, so we've
Speaker 1: covered sugar refineries and woolen mills. What else was Samsung
Speaker 1: getting into. Well, the woolen mill's subsidiary name was Child
Speaker 1: Woolen Fabrics Industries, and later it became known as just
Speaker 1: Child Industries ch EIL. This will become important later on
Speaker 1: when it becomes time to unravel which is kind of
Speaker 1: a pun the complicated corporate identity of Samsung. So for
Speaker 1: much of its history, this particular part of Samsung was
Speaker 1: focused almost exclusively on producing textiles. Eventually, Samsung would actually
Speaker 1: introduce a men'swar division that would also fall under this company.
Speaker 1: But that was in the eighties, so we'll get to
Speaker 1: that later. We've got a little bit more to talk
Speaker 1: about before I go into that. Let's take another quick
Speaker 1: break to thank our sponsor. In nineteen fifty seven, Samsung
Speaker 1: became the first company in Korea to hold open recruitment
Speaker 1: for new employees with an aim at recruiting college students
Speaker 1: graduates of college right out of the gate. So this
Speaker 1: was a new approach in Korea to create a means
Speaker 1: for college graduates to go right into the workforce. Recruits
Speaker 1: actually had to take a new employee course. It was
Speaker 1: an extensive course to become an employee at Samsung, and
Speaker 1: it served a couple of purposes. In one sense, administrators
Speaker 1: over at Samsung could determine where each person would best
Speaker 1: be used, what his or her talents would be best
Speaker 1: put forward, you know, whether you should put them in
Speaker 1: this division versus that division, this subsidiary versus that subsidiary.
Speaker 1: But it also gave these new employees the chance to
Speaker 1: learn Samsung's values, the way they do things, to get
Speaker 1: the specific skills they would need to excel at whatever
Speaker 1: job they would go to, so both parties were benefiting
Speaker 1: from this relationship. It wasn't just a means for Samsung
Speaker 1: to fill out its employee list, but also to make
Speaker 1: sure that the people they hired were the best fit
Speaker 1: and best trained for those jobs. And really they were
Speaker 1: trying to cultivate an efficient and effective workforce and it
Speaker 1: paid off. Samsung was in a position to make some
Speaker 1: bold moves into yet more industries. They had already started diversifying,
Speaker 1: and they continued to do so. It was flush with
Speaker 1: cash from its businesses and began to dive further into
Speaker 1: other ventures, including insurance, so again still not at consumer electronics.
Speaker 1: In nineteen fifty eight, Samsung acquired a company called Ncook
Speaker 1: Fire and Marine Insurance, which later became Samsung Fire and
Speaker 1: Marine Insurance, but by later I mean much later I'm
Speaker 1: talking nineteen ninety three, so it was still known by
Speaker 1: its old name for quite some time. Samsung also acquired
Speaker 1: dong Bang Life Insurance in nineteen sixty three, which would
Speaker 1: transform into Samsung Life Insurance in nineteen eighty nine. The
Speaker 1: company also took over a popular department and store in Korea,
Speaker 1: and Samsung had become the largest corporation in Korea and
Speaker 1: was transforming into a conglomerate of subsidiaries. Now we got
Speaker 1: to take a break from Samsung to talk a little
Speaker 1: bit more about Korean history, because again it's going to
Speaker 1: play an important role in the next era of Samsung's development.
Speaker 1: Had a big impact on how Samsung would progress. Now,
Speaker 1: when I last left off in the history lesson, I
Speaker 1: was talking about the formation of North and South Korea
Speaker 1: and how the split nation found itself the focus of
Speaker 1: the USSR in the case of North Korea and the USA.
Speaker 1: In the case of South Korea, you still had Lee
Speaker 1: Sung Man, who was that US backed leader who assumed
Speaker 1: control way back in the nineteen forties. He was still
Speaker 1: in control by nineteen sixty, and he had managed this
Speaker 1: by essentially changing the rules several times whenever he approached
Speaker 1: a term limit. But by nineteen sixty a substantial number
Speaker 1: of South Korean citizens had had enough. Lee Sung Man
Speaker 1: would flee to the United States as the people of
Speaker 1: his country began to resist his rule, and then they
Speaker 1: formed a second Republic of Korea. But this didn't last
Speaker 1: very long. The region was extremely unstable, so eventually a
Speaker 1: military leader named Bak Jong He seized control in a coupda'ta,
Speaker 1: forming what was called the Third Republic of Korea, although
Speaker 1: Bak ruled as a self appointed leader and had no
Speaker 1: structure in place for elections to replace him. So essentially
Speaker 1: he said I'm the leader, now just follow what I say.
Speaker 1: So technically he was a dictator, but he wasn't a despot.
Speaker 1: He led Korea into a new age of industrialization with
Speaker 1: Samsung poised to be a leader in that space, and
Speaker 1: he would rule for eighteen years during the Third and
Speaker 1: Fourth Republics of South Korea, and it was a relatively
Speaker 1: stable time for the country. So while the people of
Speaker 1: Korea didn't have any real say in their leadership, at
Speaker 1: least the lead wasn't exploiting his people, he wasn't taking
Speaker 1: advantage of his position, and he was making what a
Speaker 1: lot of people consider wise use of money that was
Speaker 1: coming from other countries like the United States, to actually
Speaker 1: invest back in Korea itself. So there's pros and cons
Speaker 1: to this particular arrangement. However, for Samsung, it was a
Speaker 1: slightly different story. Lee byung chul was in Japan during
Speaker 1: the coup d'ta and he decided to stay in Japan
Speaker 1: for a while. He actually led the company from Japan.
Speaker 1: He only returned to Korea after receiving assurances that his
Speaker 1: company would more or less be able to operate the
Speaker 1: way it had. But there was one enormous concession. Samsung
Speaker 1: had to surrender control of several financial institutions it acquired,
Speaker 1: essentially banks, and they had to turn those over to
Speaker 1: the Korean government, So that was a big change for Samsung.
Speaker 1: In nineteen sixty one, Samsung's founder became the first president
Speaker 1: of the Federation of Korean Industries. According to its website,
Speaker 1: this organization quote has championed the principles of free enterprise
Speaker 1: to achieve wholesome development of the national economy, end the quote.
Speaker 1: So it's an organization of Korean companies that are dedicated
Speaker 1: to making Korea a competitive player in the global marketplace,
Speaker 1: while simultaneously attempting to contribute positively to the socioeconomic climate
Speaker 1: of Korea itself. Samsung helped establish a couple of other
Speaker 1: industries within Korea during this time, including a paper manufacturing
Speaker 1: industry and a fertilizer processing industry. Samsung also began to
Speaker 1: explore the possibility of exporting more goods out of Korea,
Speaker 1: so not just producing stuff for Koreans themselves, but other
Speaker 1: parts of the world, reversing that trend of the country
Speaker 1: importing stuffwe In nineteen sixty one and nineteen sixty five,
Speaker 1: Samsung would see its export business increase by a factor
Speaker 1: of eight, reaching four point eight million dollars of business
Speaker 1: by nineteen sixty five. Also around this time, Samsung invested
Speaker 1: in broadcasting and newspapers inside Korea, creating a media division
Speaker 1: within the company. Samsung had also created a foundation to
Speaker 1: give back to the Korean community in nineteen sixty five,
Speaker 1: and the company founded the Korea Hospital in nineteen sixty eight.
Speaker 1: In nineteen sixty nine, Lee Byung Chol and Samsung received
Speaker 1: a Presidential award for the company's role in elevating Korean
Speaker 1: business in the post war era. It was also at
Speaker 1: this time that the company first entered the electronics industry, finally,
Speaker 1: thirty one years after it was founded. Now they're getting
Speaker 1: into electronics. He knew we would get there eventually, right, Well,
Speaker 1: we only have time to talk about the early days
Speaker 1: of Samsung Electronics before we conclude this episode. We'll talk
Speaker 1: a lot more about it in the second part. Now,
Speaker 1: Samsung's big goal was to move Korea off of imported
Speaker 1: goods in the electronics fields. Now that required setting up
Speaker 1: entire new industries in Korea. I cannot stress what a
Speaker 1: huge deal this is. It meant that you couldn't just
Speaker 1: buy semiconductor chips and other parts from other countries. They
Speaker 1: wanted to make those industries within Korea itself, which meant
Speaker 1: building the things or acquiring companies that were on the
Speaker 1: way to doing that and then putting them toward this goal.
Speaker 1: So Samsung Electronics was born as a result of this,
Speaker 1: and Samsung ended up acquiring about fifty percent ownership of
Speaker 1: a company called Korea Semiconductor and began to churn out
Speaker 1: parts to make electronics. Samsung established more subsidiary companies like
Speaker 1: Samsung electro Mechanics, Samsung Semiconductor and Telecommunications, and Samsung Corning,
Speaker 1: so lots more subsidiary to fall in line and help
Speaker 1: support this effort of bringing Korean electronics to the world,
Speaker 1: and they bullishly began to develop products. The first major
Speaker 1: Samsung Electronics product was a black and white television set
Speaker 1: sporting Korean components, so it was all Korean parts inside
Speaker 1: of it, and it hit Korean store shelves in nineteen
Speaker 1: seventy two. It was a black and white set, which
Speaker 1: meant that Samsung and Korea were trailing behind other countries
Speaker 1: at that point, since color television had actually overtaken black
Speaker 1: and white TV sales in nineteen seventy. If you listened
Speaker 1: to my episodes on the history of TV, you remember,
Speaker 1: even though color television had debuted in the late fifties
Speaker 1: and really got started in the sixties, it wasn't until
Speaker 1: the seventies that color televisions themselves started to outsell black
Speaker 1: and white TVs. But even so, even though it was
Speaker 1: a black and white set, it was still a huge
Speaker 1: hit in the Korean marketplace, and by nineteen seventy six,
Speaker 1: Samsung had sold its one millionth black and white TV set,
Speaker 1: so a pretty big hit. Samsung also produced washing machines
Speaker 1: starting in the early nineteen seventies they still do to
Speaker 1: this day. The company also incorporated a few more subsidiaries,
Speaker 1: because you know that has to happen every couple of
Speaker 1: paragraphs in my notes. At this point, Samsung really is
Speaker 1: a company of companies. They included Samsung petro Chemical and
Speaker 1: Samsung Heavy Industries in nineteen seventy four, and then Samsung
Speaker 1: Construction and Samsung Fine Chemicals by nineteen seventy seven. Also
Speaker 1: by nineteen seventy seven, the company began to export color televisions.
Speaker 1: And now we're finally getting into the realm of Samsung
Speaker 1: becoming a player on the international consumer electronics stage.
Speaker 2: Well, that wraps up Part one of the Samsung Story.
Speaker 2: Next week the classic episode will be the Samsung Story
Speaker 2: Part two, because that's how numbers work. So I hope
Speaker 2: you are all well and I'll talk to you again
Speaker 2: really soon.
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