Ho-Am felt that business had to contribute to national and social growth, and although the Samsung Trading and Chosun Brewery operations continued to be highly successful, he believed that they could not fulfill this task. The Korean economy at that time lacked both capital and technology and electrical output was minimal. In addition, there was not much hope for the expansion of commodity production. Keenly aware of this situation, Ho-Am judged that trade was the only path to prosperity, moved his headquarters to Seoul, and began international trade in earnest. He gathered people from various sectors of society to explain these realities and finally even convinced those who opposed such involvement because of the potential danger involved.
After a year and a half in Seoul, in Nov. 1948, Ho-Am hung up his sign, “Samsung Corporation.” The company traded by exporting cuttlefish to Hong Kong, Singapore and other destinations, and its first imports were cotton thread as it began to expand its business. Within a year and a half, Samsung Corporation was the domestic leader in trade and it was on a roll, only to lose everything with the outbreak of the Korean War on June 25, 1950. Salvaging whatever he could, Ho-Am then fled to Daegu and returned to the Chosun Brewery. Despite the emergency, the employees of Chosun Brewery not only endured but flourished, garnishing over 300 million Won. It was a time when he developed the capability to accurately evaluate people. With this money, he could establish the new Samsung Corporation(known today as Samsung C&T) on Jan. 1, 1951, in Busan.
The vice-president of Samsung Corporation, Mr. Hong-Jae Jo, left for Hong Kong with 30,000 pounds of dried squids by ship on Nov. 1949. After arriving in Hong Kong, Mr. Jo entrusted sales of dried squids to Korean resident traders. In addition, he bought 50 packages of cotton threads on credit, and additional 50 packages of cotton threads taking 30,000 pounds of dried squids as security for a loan. It was the first D/P* dealing in the Korean history. Imported cotton threads were a sellout at the price of two times as much as the purchase price, and this made it possible for Samsung Corporation to become a middle-sized trading company just after a year of its foundation. Samsung Corporation's D/P dealing with 30,000 pounds of cuttlefish was a starting point toward 'independent trading' by overcoming its passive trading mode.
*D/P - Document against Payment A condition that the bank that received the bill of landing and the promissory note, loans the money to the company, for the necessary price for the landing and delivering the exported goods.
Following the success of Samsung Trading, Ho-Am took over Chosun Brewery in 1939. At the period, brewery was a very popular business. Chosun Brewery provided a solid ground for Samsung, by producing soju, refined rice wine, raw rice wine as well as cider. However, soon after the Korean War broke out, Samsung Corporation had to face a huge difficulty, when its imported goods were stolen from the warehouse during the war. On the other hand, due to the refugees who rushed to Daegu, Chosun Brewery became more and more prosperous. Thus, during the time, Chosun Brewery was able to make massive profits.
In the meanwhile, as the frontline kept moving south, even Daegu became no longer a safe place to stay. In an attempt to hide the money safely, the employees of Chosun Brewery decided to entrust the money to a liquor wholesaler in Busan. They sent him the Chosun Brewery's car that was loaded with two wooden boxes of cash (total of about 300 million won) and disguised the cash as a bundle of documents.
Unfortunately, the car went missing on its way to Busan. And in the midst of turmoil, the employees had no other choice but to give up on finding the car. Surprisingly, the driver of the car came back about a month later. He said that, right before his compulsory military draft, he hid the boxes of cash in a rice mill on the street of Yeong-cheon that is located in the mid of the way to Busan. When the employees and the driver rushed to the rice mill, they found nothing but burned-out store. But to their surprise, the wooden boxes of cash were placed in the heaps of ashes. Ho-Am, who lost all of his funds during the war, was able to reestablish Samsung Corporation with the money in Busan.
Although business began to prosper, Ho-Am had a heavy heart. There was not only a dearth of human resources as a result of the war; Korea was also totally lacking in material resources. While he had long perceived exports as the key to growth, the country would have to import raw materials and develop sufficient technology as well as manufacturing and production facilities and equipment. He had to bow to the fact, however, that the time was not quite ripe, so he decided to invest first in local manufacturing, and after considerable survey work, decided to invest in sugar refining rather than the other two alternatives of paper manufacturing and pharmaceuticals
For the first time since liberation from Japanese occupation in 1945, Korea had its own sugar refinery, Cheil Sugar Co. Ltd., established by Ho-Am with the support and cooperation of local authorities. But although the plant came to Busan, Japanese technicians for plant assembling could not enter Korea due to restrictions on all things Japanese. Thus the plant was forced to rely on local technicians alone; yet Mr. Jae-Myong Kim as director of the plant had the courage and fortitude to complete the facilities with domestic expertise.
After overcoming numerous trials and tribulations, the plant finally produced 6,300kgs of products on Nov. 5, 1953, a day which became Cheil Sugar’s official date of establishment. That year, Korea’s rate of dependency on refined sugar imports was a full 100%, but thanks to the lively production efforts of Cheil, that rate fell to a mere 7% by 1956. In only three years, Ho-Am was able to realize the first step in his dream of replacing imports with domestic production.
The success of Cheil Sugar was not enough to satisfy Ho-Am however; he turned his attention to developing the woolen fabric industry as the major industry for the newly born nation. The economy sector was not pleased to hear such plans. Everyone thought that it was absolutely ridiculous to try to complete with a 400-year-old British tradition. Unruffled by the opposition, Ho-Am went about his ambitious plan to develop the finest production facilities in the world. He requested Mr. Kohei Hayashi, the technical director of “Great Japan Woolen Fabrics,” for help in developing a master plan, and applied to the government for a permit to build the essential woolen fabric production plant. The government insisted that the machinery be imported from a West German company, which it had already given approval to, so Ho-Am had to comply with that situation. The agreement was that Spinnbau Co. would provide 60 German technicians and that plant construction would take one year. With sufficient domestic experience already under his belt, Ho-Am felt that it would be possible to use domestic labor for assembly and construction of the plant and requested that only four German technicians be dispatched to the plant to help with the various production processes. Spinnbau Co. finally agreed with Ho-Am’s proposal on the condition that it would not be held responsible if the facility failed to produce.
First, carding facility was finished a full six months ahead of schedule, and on May 2, 1956, after final inspections, the whole plant began operations. Of course there were problems with the initial products but Ho-Am was resolved to promote continued rapid development and optimization until the plant’s products could match those of the British. Because of the deeply imbedded mistrust of Korean products, the fabric was sold at unreasonably low prices, but with continued efforts to improve quality, the company steadily built a solid reputation. On October 26, 1957, Korean President Syng Man Rhee visited the Cheil Textiles production plant, and praised it as a truly patriotic endeavor, writing in calligraphy “uip’ichangsaeng,” or “clothing as a new means to make a (national) living.”
At the time, Korea was also totally dependent on imports of fertilizer, and a full 40% of foreign aid was going to the procurement of this. Ho-Am saw this situation as another important one to resolve for national economic growth, and thus turned his attention to the task of achieving total domestic production and supply. The turmoil from the ouster of Korean President Rhee and the military takeover by General Chung-Hee Park brought the fertilizer project to a standstill, but then President Chung-Hee Park suggested to Ho-Am to build the fertilizer plant, promising full government support for the project. Ho-Am in turn agreed so long as the government promised not to change its policy at a later day and so long as the government left it entirely up to Samsung to take care of all domestic and foreign dealings necessary for the completion of the project. President Park agreed.
After an endless series of difficulties and managerial decisions that tested Ho-Am’s resolve, groundbreaking for the plant was held at the Ulsan Industrial Estate on Dec. 10, 1965. A full 80% of the plant was completed by mid-September of the following year, and with completion approaching, Ho-Am was off to Tokyo to promote the rapid shipment of machinery to the facility. However, through the mistake of an employee at the bonded warehouse, some portion of saccharin was sold on the local market. The prosecutor’s office solved the problem with a fine, but due to public pressure it was forced into a full scale reinvestigation against the principle of not reopening a settled case. Ho-Am was once again put in a corner with the dream of a fertilizer plant completion possibly becoming a disaster. Desperate for a resolution and with desire for the completion of the fertilizer plant, Ho-Am decided to request the government to step in, take over the plant and assure its completion. He then publically announced that he was turning the plant over to the government. He had no choice but abandon his dream just before its completion.
Finally, after a number of additional complications, in March 1967, he officially gave 51% of the company stock to the Korean government. Overall, it was a bitter personal pill for Ho-Am to swallow after 10 years of dedicated efforts to single-handedly build and put into operation the world’s largest fertilizer plant, but he took it in stride and did not let it affect his determination and resolve to continue with efforts for national economic growth.
In the late 1960’s, Ho-Am then turned his sights to the rapidly progressing world electronics industry, and after considerable study and investigation, decided that the industry, with its emphasis on technology, labor, added value, and prospective domestic and international markets, was perfect for Korea’s economic growth. After aggressively convincing the government of the unlimited future potential of the industry, he established Samsung Electronics on Jan. 13, 1969. By 1978, only nine years after its founding, the company had produced 2 million units of black-and-white televisions, and by May 1981, total production had reached 10 million units. By March of 1984, color television production had reached 5 million units. The company also became the third in the world, following Japan and the Netherlands, to develop its own VTR technology. It was also in the 1980s that the company started to turn its attention another important stage, that of production of semiconductors and computers. Through intensive technological developments and highly refined productivity levels, the company rapidly became domestic leader and then forged its way into today’s position as a truly international leader in the field.
Having established a solid foothold in the electric and electronics industries, Ho-Am then boldly ventured into the field of heavy industries. The initial efforts were in shipbuilding. In May 1973, Ho-Am approached Chairman Takuchi of Japan’s IHI for cooperative efforts. Chairman Takuchi, who had full confidence in Samsung, was delighted to comply with Ho-Am’s request, and they agreed to build a 50:50 joint-venture at Anjeongni, Tongyong County, South Gyeongsang Province. Immediately afterwards, however, the oil crisis struck, and although the company was able to secure government permission for the project, the recession in the shipbuilding industry from the oil crisis resulted in a 2-3 year delay. Ho-Am had the confidence to either continue with the project or to let it go, but he could see that he would have to let it go. Due to the oil crisis, both the government and the banks were hoping that Samsung would absorb the mid-sized shipbuilding industry which was in heavy recession. So in April 1977, Samsung took over what is today’s Samsung Heavy Industries Geoje Shipyard.
On September 1, 1979, Samsung completed the first dock and began adopting advanced shipbuilding technology from abroad. Within three years, the yard had produced 8 mid-sized tankers and bulk carriers. The company then built a second dock which was twice the size of the first, bringing total shipbuilding capacity to 450,000 tons by 1986 while Ho-Am was still alive.
At the age of 73, a time when many are completing their lives, Ho-Am felt that it was an important time to make another strategic move for the benefit of the nation, and despite opposition, he decided to advance into semiconductors. He read everything that he could obtain related to the opinions of a broad range of specialists and to all relevant materials, and then decided to procure the most excellent materials available for application to semiconductors for computers. In Oct. 1982, he organized semiconductor and computer specialty teams, and on March 15, 1983 formally announced investments into VLSI industry. That was a decision made after a full year of highly intensive survey, research and review processes.
The project then imported 64KD RAM technology from Micron Technology, Inc., as well CMOS production technology and 16KS RAM from Sharp Co. Through cooperation and merger between the government and the private sector, ground-breaking was finally held for production facilities on Sept. 12, 1983 and the facility was completed in only 8 months and 18 days in March of 1984. Finally on May 17, 1984, Samsung Semiconductor and Telecommunications VLSI plant in Kiheung was completed. It was Korea’s first and launched the nation into third place internationally as a semiconductor producing nation. In only 4 months it was successful in reaching a 51% production yield rate and in only a half year the rate was over 75%, higher than that of Japanese competitors. The products also successfully passed highly rigid American standards and the company began its initial exports in September. In Oct. 1984, the company successfully developed its own 256KD RAM, and in March 1985, a second production line mainly for 256KD RAM went into operation.
Ho-Am was acutely aware of the fact that if he failed in the electronics industry, Korea would remain in the ranks of undeveloped nations, so he continued to steadfastly strive for success in the field of semiconductors, realizing the both Samsung’s and the nation’s industrial fate would be dependent on its success.
