Samsan Group
 | |
 Samsan headquarters in Bingang Island, Donggyŏng | |
| Industry | Conglomerate |
|---|---|
| Headquarters | Bingang Island, Donggyŏng , |
Area served | Worldwide |
Key people | Kim Dong-chŏl (chairman) |
| Products | automobiles, construction equipment, consumer electronics, chemicals, home appliances, machine tools, semiconductors, steel |
| Services | Advertising, construction, information and communications technology, shipbuilding |
| Revenue |  OS$505 billion (2017) |
| Total assets | OS$768.5 billion (2017) |
Number of employees | 894,000 (2016) |
| Divisions | Samsan Consumer Electronics Samsan Defense Samsan Heavy Industries Samsan Maritime Engineering Samsan Motors |
| Website | Samsan.mh.com |
Samsan Group (Menghean: 삼산 / 三山) is a partially state-owned Jachi-hoesa conglomerate headquartered at the Samsan Office Complex in Bingang Island, Donggyŏng.
During Menghe's 1998 enterprise reforms, the Samsan Heavy Industries Group was formed from the merger of three state-owned enterprises in the steel and engineering sectors. While its assets were nominally state-owned, it was given autonomy from state interference and placed under the charismatic leadership of Kim Dong-chŏl. Under Kim's chairmanship, Samsan aggressively diversified into a wide range of related industries, growing into Menghe's largest conglomerate. In 2003 it was reorganized into the Samsan Group, with Samsan Heavy Industries as a wholly-owned subsidiary company. Though initially confined to Menghe, it has recently expanded its presence on the global market, and in 2011 it allowed foreign investors to buy minority shares.
The Samsan Group remains a highly diversified conglomerate, with major involvement in the automotive, construction, shipbuilding, steel, chemicals, electronics, and defense sectors. Its largest subsidiaries are Samsan Autos, Samsan Heavy Industries, and Samsan Consumer Electronics (SCE), and as of November 2018 it owns full or controlling stakes in a total of 79 companies. With a reported revenue of $505 billion in 2017, it is the largest corporation in Menghe, equivalent to 7.9% of national gross domestic product.
Etymology
Samsan (삼산 / 三山) means "three mountains" in Menghean, a reference to three adjacent mountains outside the city of Dongrŭng. These mountains - Johangsan, Gyeyangsan, and Palgongsan - were visible from the Donghae No.12 Steelworks, a state-owned enterprise which formed the core of the Samsan group when it was created. Kim Dong-chŏl also stated that the three mountains symbolize the three virtues of loyalty, reliability, and ingenuity, which he hoped to build into Samsan in his time as chairman.
The original Samsan logo (1992-2003) featured the three mountains in greater detail, though viewed from the perspective of Bima Lake, not the No.12 Steelworks, as is commonly believed. After the Samsan Heavy Industries Group was reorganized into the Samsan Group, the company switched to a new stylized logo with three overlapping triangles representing the mountains. Samsan Autos and Samsan Consumer Electronics both use a "three diamonds" logo, intended to symbolize the three mountains and their reflections in Bima Lake.
History
Origins
The Samsan Group can trace its lineage back to the Northeast Steel Company, a state-owned enterprise founded in 1965 to manage factories captured during the Menghean War of Liberation. During Sim Jin-hwan's drive to pursue industrial development, the Northeast Steel Company emerged as a leading steel producer, though poor management and inefficient allocation of inputs led to disappointing productivity. The company's main facility, the Donghae No.12 Steelworks, was located outside the city of Dongrŭng, and was the second-largest steelworks in the country during the 1970s and 1980s.
After the Decembrist Revolution, the Northeast Steel Company went through a series of internal restructurings as part of Menghe's ongoing economic reforms. During the early 1990s, it closed down many of its poorly performing local factories, while expanding its main facilities and introducing imported equipment for more efficient production. This involved large-scale layoffs, especially in the inland factory towns of Gilim province, which were also facing economic hardship due to ongoing civil unrest in nearby Polvokia.
In 1994, the Northeast Steel Company was reorganized into the Samsan Heavy Industry Company, which began a state-sponsored push into downstream industries. The company set up its first factory for manufacturing automotive parts in 1995, and in 1997 it formed a joint operation with a Dayashinese company to manufacture construction equipment.
Corporatization
Under Menghe's legal reform of the enterprise system in 1998, Samsan was classified as a Jachi-hoesa, or autonomous enterprise, meaning that while its assets were technically state-owned it would be given full independence from command-economy oversight as long as it continued to meet production targets. It was placed under the chairmanship of Kim Dong-chŏl, an energetic businessman who had succeeded in streamlining operations at the Donghae No.12 Steelworks. In the process of transition, it also bought up the Donghae Auto Company and the Haeju Steel Company, both of which were state-owned enterprises struggling with their new financial restrictions.
Chairman Kim soon earned a reputation as a dynamic and talented reformer, transforming the expanded Samsan Heavy Industries Group from a collection of moribund state-owned enterprises into a smoothly run modern corporation. He formed a close working partnership with Choe Sŭng-min, regularly meeting with the latter to discuss industrial policy and enterprise reform. In the wake of the 1999 Menghean financial crisis, Samsan bought up dozens of poorly-performing mid-size enterprises and either restructured them for greater efficiency or managed their bankruptcy and closure proceedings.
When the Ministry of Economic Planning announced a "big push" into automobiles and shipbuilding, they selected Samsan for the leading role. The company set up new subsidiaries in each of these sectors - Samsan Motors and Samsan Maritime Engineering, respectively - and staffed them with experienced engineers from the company's other divisions, while also bringing in foreign advisors to oversee the technology transfer process. Both expansions proved highly successful, though in the early years their products were fraught with quality-control issues. Building off this precedent, Samsan Heavy Industries set up an electronics arm in 2003, reorganizing the broader company into the Samsan Group. While Samsan Consumer Electronics initially focused on supply-chain assembly, it steadily pushed into household appliances and other consumer goods, and in 2006 it put out a low-cost flip-phone which secured it a presence in the domestic cell phone market.
Antitrust case
In 2011, Samsan's continued expansion drew the attention of economic regulators, who expressed concern over its dominance of the heavy industry sector. This was especially true in the northeastern areas of the country, where Taesan and Chŏnsŏ, its main competitors, had less of a presence. Under a court ruling in 2012, the company sold roughly half of its automobile and steel facilities to a new independent company, Donghae Heavy Industries, which quickly emerged as a leading competitor. Kim Dong-chŏl, still chairman, criticized the court decision as a concession to populist critics, but its defenders note that car prices fell and in-factory productivity levels rose two years after the reorganization.
Subsidiaries
Samsan Heavy Industries Group
Samsan Heavy Industries is Menghe's second largest steel producer by output. In 2018 it produced 24.2 million metric tonnes of steel, accounting for nearly 10% of the 273.6 million metric tonnes of steel produced in Menghe during the same year. It has expanded beyond its original factory to control more than a dozen major steelworks in Menghe. Some of these facilities specialize in high-grade alloys for the aerospace and defense sectors. Others extract rare-earth elements from ores imported from Dzhungestan and Polvokia to produce specialty parts for Samsan's consumer electronics market.
Samsan Heavy Industries also owns subsidiary companies which produce equipment for mining, construction, and excavation. This arm of the company helped fuel Menghe's investment-driven construction boom, gaining a reputation for reasonably high-quality machinery. During the 2000s Samsan's industrial machinery arm received state support to help it compete with imported alternatives, but in recent years it has begun to expand its presence on the export market, particularly in developing countries but also in developed ones.
Samsan Motors
Samsan set up an auto manufacturing arm in 2000, buying up the struggling Gilim Motor Company and overhauling its communist-era production line. The group also contracted out supply-chain production for foreign auto companies, signing partnerships with leading automakers for joint-venture plants in Menghe's special economic zones. Using staff and experience from these joint operations, Samsan invested in building up its own brand, and its new-build assembly line in Hwasŏng is today among Septentrion's largest.
In contrast to Chŏnsŏ, its main domestic competitor, which expanded production during the Disciplined Society Campaign and attempted to brand its vehicles around reliability and durability, Samsan Motors was more willing to model its cars after foreign styles and trends. Despite an initial reputation for poor quality, its vehicles have established a growing foothold in Columbian and Casaterran markets, and have enjoyed greater success overseas than Chŏnsŏ, Taekchŏn, or Taesan, Menghe's other major auto companies.
In recent years, Samsan has made major investments in hybrid and electric vehicles as part of a domestic competition to produce an eco-friendly car cheap enough to sell widely to domestic consumers. It has also made inroads developing a high-end electric car for the luxury market.
Samsan Consumer Electronics
<imgur thumb="yes" w="300" comment="The Arirang 2, launched in 2013, was Samsan's first successful smartphone model, and helped the company gain a foothold in the domestic market.">hksZTQr.png</imgur> Samsan Consumer Electronics, or SCE, specializes in electronics and information technology, and is Menghe's largest phone maker, followed by Sinsegye. Ever since it entered the market with an inexpensive flip phone in 2006, SCE has gained a reputation for producing phones in the mid-to-low price range, catering mainly to domestic customers but also to emerging middle-class buyers in the developing world. Its latest smartphone, the Samsan Arirang 5, includes a broader range of features, including a long-lasting battery and a high-grade camera, and sells at ₩10,000 domestically (about $450).
Beyond its flagship smartphones, SCE also produces a wide range of other consumer products and home appliances, including laptop computers, air conditioners, space heaters, printers, refrigerators, dishwashers, digital cameras, and land-line telephones. Further up the supply chain, it produces semiconductors, liquid crystal displays, AMOLED displays, solid-state drives, and integrated circuits. In general, SCE products are known for high durability and reliability but less-than-state-of-the-art performance, though in recent years the company has tried to push into higher-grade sectors.
Samsan Maritime Engineering
Samsan's maritime engineering branch is the largest shipbuilding company in Septentrion, with an annual revenue of $38.5 billion in 2017. Its main shipyard complex in Anchŏn is among the largest in the world, with five primary drydocks (two are 750 meters long and 105 meters wide) and a workforce of some 28,000 personnel. The company's "low cost, high professionalism" model, combined with the sheer size of its operation, forced a number of rival shipyards in developed countries out of the large-hull business, though Samsan itself is now losing money as a result of a glut on the container ship market.
The company's specialization is in high-tonnage civilian vessels, including oil tankers, container ships, LNG carriers, bulk carriers, Roll-on/roll-off cargo ships, factory ships, heavy-lift ships, drillships, and large passenger ferries. On occasion, Samsan has also accepted contracts for large icebreakers, mainly for export to Polvokia. It also offers a range of special maritime engineering services, including the construction of at-sea wind turbines and the construction, movement, and installation of oil platforms.
Samsan does not produce military warships for the Menghean Navy, which has two major shipyards, one in Gyŏngsan and one in Donggyŏng; both are run by state-owned enterprises with direct Navy oversight. Samsan has, however, accepted contracts for the production of underway replenishment ships and other auxiliary vessels.
Samsan Defense
Samsan Defense was formed in 1994, when the Menghean Ministry of National Defense cut funding for the Minchŏl Tank Factory in Songrimsŏng. As part of a deal to minimize unemployment, Samsan hired Minchŏl's design team and many of its skilled workers. While many of the newly-hired staff were transferred to civilian projects under Samsan Heavy Industries, Samsan also retained a small military-sector component known as Samsan Defense.
During the late 1990s, Samsan Defense primarily specialized in upgrade packages for the JCh-2 and JCh-4 medium tanks, which were formerly produced at the Minchŏl Tank Factory. With the Menghean Army downsizing its active forces and cutting its procurement budgets, Samsan Defense began marketing these upgrade packages to past foreign buyers of Menghean armored vehicles. In 2004 the company made a major breakthrough with the design of the P150G2P Songsu-po, which was officially accepted for service in the Menghean Army, making it the first postwar Menghean armored fighting vehicle to be designed by a (partially) private company.
Since then, Samsan Defense has steadily expanded its area of specialization, producing targeting systems, optics, drones, and armored cars in addition to armored fighting vehicles.
Other holdings
Controversies
Labor abuses
The Samsan Group has been the target of repeated accusations of labor rights abuses, including paying workers regular wages for overtime work (Menghean law requires that overtime wages be at least 1.5 times higher than standard wages) and failing to comply with safety regulations. A series of worker suicides at the Samsan phone assembly plant in Haeju in 2011 drew negative media attention to the company, eventually pressuring the plant's manager to offer increased wages and more holiday time.
Like many Menghean Jachi-hoesa companies, Samsan operates a two-tier internal labor system, with separate tracks for skilled workers (who receive in-house training and are offered lifetime employment with the firm) and flexible workers (who work on short-term contracts and can be terminated with little advance notice). The flexible workers are disproportionately women and migrant workers, and their lower wages and less stable working conditions have contributed to rising inequality in Menghe.
Some of Samsan's domestic suppliers have been accused of using child labour in their manufacturing process, a problem brought to light by an undercover investigation of an assembly shop in Haenam Province in 2008. In response to public pressure, Samsan stated that it would terminate all business with the shop in question, but critics allege that it continues to source low-skill assembly work to domestic and foreign companies which employ underage workers.
Automobile regulations
An investigation by the Glasic Environmental Protection Agency in 2015 found that Samsan Motors had falsified both fuel efficiency and emissions figures for its latest car models, and that their genuine emissions levels disqualified them from sale on the Columbian market. Samsan Motors initially disputed the accusations and sued for defamation, claiming that the ruling was part of a politically motivated effort to reduce competition, but a domestic investigation by the Ministry of Environmental Protection confirmed that Samsan cars were producing emissions at higher rates than the company claimed, and uncovered evidence of a major bribery and data falsification scheme with auto safety regulators. The company eventually agreed to a ₩4.8 billion ($214 million) settlement to cover the costs of the investigation and reimburse owners of the defective cars, both in Menghe and abroad.
In 2018, a viral online video by a consumer rights organization reported that the "assisted cruise control" system on the Samsan Alliance had caused accidents by abruptly accelerating the vehicle to high speeds without driver input, and demanded an explanation and an immediate recall. The video was promptly taken down, but after fierce online criticism, Samsan Motors agreed to suspend sales of the Alliance and recall all vehicles equipped with the system in order to conduct an internal investigation.