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Oral-History:Yong Sun Kim

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About Yong Sun Kim

After studying telecommunications engineering at Seoul National University, Yong Sun Kim worked for the Ministry of Communications, Korea Telecom, and Gold Star. At the time of this interview, he worked for the LG (Lucky-Gold Star) Academy, the company's training group, having served for seven years as this Academy's president.

This interview covers Yong Sun Kim's education, detailing the curriculum at Seoul National University and the job shortages in the years following the Korean War. Yong Sun Kim then describes his employment with the Ministry of Communications, including the management and language training programs he attended in the United States in 1961.

In 1963, Yong Sun Kim became a telecommunications project manager at Gold Star Manufacturing. He details Gold Star's products; markets; and finances, including loans from the German company Friermaster and collaboration with the Japanese company Hitachi. This section also covers Gold Star's relationship with the Korean government, and the effect of government bureaucracy on research planning.

Yong Sun Kim narrates the growth of Korean electronics manufacturing by describing Lucky Chemical Co.'s transition from cosmetics container manufacturing to case manufacturing for Gold Star radios. He then describes the business models used by Lucky-Gold Star in the late 1960s, the 1970s, and the 1980s, including corporate collaborations and international collaborations.

The final segment of the interview describes research and development at Gold Star and details Yong Sun Kim's work in employee education and management training at the LG Academy.

About the Interview

YONG SUN KIM: An Interview Conducted by Andrew Goldstein, Center for the History of Electrical Engineering, 23 August 1996

Interview #313 for the IEEE History Center, The Institute of Electrical and Electronics Engineering, Inc.

Copyright Statement

This manuscript is being made available for research purposes only. All literary rights in the manuscript, including the right to publish, are reserved to the IEEE History Center. No part of the manuscript may be quoted for publication without the written permission of the Director of IEEE History Center.

Request for permission to quote for publication should be addressed to the IEEE History Center Oral History Program, IEEE History Center at Stevens Institute of Technology, Castle Point on Hudson, Hoboken, NJ 07030 USA. It should include identification of the specific passages to be quoted, anticipated use of the passages, and identification of the user.

It is recommended that this oral history be cited as follows:

YONG SUN KIM, an oral history conducted in 1996 by Andrew Goldstein, IEEE History Center, New Brunswick, NJ, USA.

Interview

INTERVIEW: Yong Sun Kim

INTERVIEWER: Andrew Goldstein

DATE: 23 August 1996

PLACE: Seoul, Korea

Career summary

Goldstein:

I’m sitting with Yong Sun Kim at his office at LG in Seoul, Korea. It’s August 23. Mr. Kim, perhaps we can start with your telling me what your position at LG is.

Kim:

Now I’m working for LG Academy in the in-house Training Center for all LG Group. Until last December I was the President of this Academy, for seven years. However, after college I started as a telecommunication engineer, because my major in college was telecommunications. At that time, as there was no private corporation in this country, the only place I could have a job was with the government. And I was working for the Ministry of Communications. Now, the function of this ministry has been divided, and I transferred to Korea Telecom. The business operation separated from the ministry at that time. They had the administration of all the telecommunications of the country itself, and the business. After seven, eight years of service, I changed my job and joined Gold Star at that time. They started in 1964. Before that, of course, they started the production of very simple electronics equipment, the consumer products. However, in 1964 they started the assembly of telecommunication equipment. That’s why they asked me to join. And since then, I’ve been working for the company as a telecommunications system engineer, planning the coordination of the sales and production materials and supplies.

Education

Goldstein:

Can we step back and start with your education? Tell me how you came up to that point?

Kim:

I have four certificates of completion of graduation of primary school, high school, and college courses because of the Second World War, and Korean War. My study in school was interrupted by wars.

Goldstein:

What year did you acquire this certificate?

Kim:

In primary school, of course, and high school, and college. I was in the engineering college of Seoul National University. And my major was telecommunications engineering. And now they’ve changed the name to electronics engineering. At that time we called it telecommunications engineering. And as I told you, after graduation, or I’d better say after getting the certificate, there was no place to go for a job.

Goldstein:

That was after the Korean War?

Kim:

In 1956. And then as there was no other choice, I started working for the government, as I told you.

Goldstein:

How many people were there in your class, when you graduated?

Kim:

Twenty-five from the telecommunications engineering.

Goldstein:

And you all faced this same problem, that there was very little private industry?

Kim:

Very little. Most of them, especially from this telecommunications engineering department. Half of them went to the ministry of communications, and half of them to the Korean Broadcasting System, a government-owned broadcasting organization. There was no other choice.

Goldstein:

What was the content of your education? Was it broadly in many areas of telecommunications?

Kim:

At that time, mostly circuit theory, alternative current theory, transistor phenomena. Mostly radio engineering. However, I should tell you that we just heard of the transistor. We did not learn in college about the transistor. What we learned was the vacuum tube. And in 1962, when I visited the Canadian Communications Bureau, one very young engineer showed me the digital circuit.

Goldstein:

The and/or gate?

Kim:

The and/or gate, right. I should say, “stone age.”

Goldstein:

Tell me, in your education, was there emphasis on military systems, or was it not?

Kim:

Actually almost none. They just taught us transport theory.

Goldstein:

All very theoretical?

Kim:

Yes.

Goldstein:

So, not many labs?

Kim:

Almost none.

Goldstein:

Was the program, the academic program, operated solely by the Seoul National University, or was there perhaps an American involvement or a military involvement?

Kim:

None.

Goldstein:

So there was no connection with the outside political environment?

Kim:

No. In the late ‘50s and early ‘60s, the Seoul National University started a program to dispatch the teachers, or professors, or instructors, or whatever you may call them, to the University of Minnesota. They had a special program for the Seoul National University. So, most of the professors of Seoul National University, they obtained their Ph.D. during that period, in the late ‘50s and early ‘60s. When I was a student, there was no professors with Ph.Ds.

Goldstein:

Where had the instructors gotten their education?

Kim:

They were the graduates, four or five years ahead of us.

Goldstein:

From the same program?

Kim:

Yes.

Goldstein:

Now, at that time, Korea was still quite poor. How were you able to go to the University? Was that a rare opportunity?

Kim:

Good question. I was so to say a live-in tutor for a boy of an army general. I was living with that family.

Goldstein:

So you were able to find a patron, somebody who could support you?

Kim:

It was big money for me, but for the current money standard, it’s nothing.

Ministry of Communications

Telephone switching maintenance

Goldstein:

All right. So, you graduated in 1956, and went to the Ministry of Communications?

Kim:

Yes.

Goldstein:

And what sort of work did you do there?

Kim:

The director of telecommunications, of the ministry, he was a very strict person. And they put this newcomer in the field work. They climbed up the pole, went down the manhole, the street, out in the water from the manhole, and they spliced cables, tested open wire, everything.

Goldstein:

This was for the phone system?

Kim:

Yes. And did the maintenance, everything, for a full two years. And after that, he put us in the office room.

Goldstein:

So it was sort of the training program. Hands-on?

Kim:

Yes.

Goldstein:

They go directly to the office?

Kim:

Yes.

Goldstein:

When had all that infrastructure that you were working on, when had that been installed?

Kim:

What do you mean by infrastructure?

Goldstein:

The cables and the equipment that you were maintaining?

Kim:

I said “maintenance,” but I should say in Seoul, by the end of World War II, there was about ten or fifteen thousand pieces of the switching equipment. There were maybe ten thousand of that manual battery, maybe three or four thousand of the metal.

Goldstein:

Phones operating on such equipment?

Kim:

Right. During the Korean War, everything was destroyed. And when I joined the Ministry, we had maybe several lines kinds of telephone equipment in Seoul. I said “maintenance,” but maintenance of these several thousand lines, and of course, the reconstruction of the new equipment, new lines. That was our job.

Training in the U.S.

Kim:

And after five years of service, they sent out for officers training for one year. The program was financed by ICA, International Corporation Administration, of the U.S. Government.

Goldstein:

This was when you went to Minnesota?

Kim:

Yes. And later this organization changed their name to AID, Agency for International Development. And my project manager sent me to Minnesota where the metals equipment was used. I was somewhat disappointed. I very soon I realized that it was not for technical training. This was for a kind of language training, an orientation to U.S. environment.

Goldstein:

What was the goal of the program? Do you know what you were supposed to get out of it?

Kim:

It was not clearly described in the contract, but it just simply said a telecommunications experiment, for experience. Of course, after that they sent me to a very small college in Indiana for several weeks for management training. And then I had an opportunity to spend four or five months in Northwestern Bell Company, in Des Moines, Iowa, where I had training all through the department, in operations, engineering, coordination, etc. And I spent a couple of months with Teletype Corporation in Chicago, with a teletype machine.

Goldstein:

Was all of this sponsored by the Administration Corporation?

Kim:

Yes.

Goldstein:

And you were hoping to get exposure to advance technologies? That’s what you were hoping for?

Kim:

Yes. Then, I spent one and a half months with Canadian Joints Products Bureau, Western Union, and so on. One thing I was very much impressed with — this is not technical or communication or electronics — but one thing I was very impressed with was at the end of the program, they had a special one week program for repatriation.

Goldstein:

For Koreans who were going back?

Kim:

It was a very impressive one. We didn’t think of such an idea, because, it’s very, very important. No one in Korea has ever thought of that such orientation for Korea. So, I’m always emphasizing that such an idea, such a way of thinking or such an arrangement, is much more important than pure technical knowledge.

Goldstein:

In what way? What value did it have?

Kim:

Well, the technical thing, or pure knowledge thing, you can learn. But this kind of new way of thinking, new idea, you cannot learn by books or through lectures, or at a university.

Goldstein:

What sort of things did they tell you in this program?

Kim:

When you come home, you will be, again, a stranger there. And your family will look at you very differently from what you had before. I mean, before coming to the U.S. Your friends, your colleagues, some of them, they are curious about it. And some people are jealous of it. And you have, during your stay in this country for twelve months, you have changed yourself, without knowing the fact that yourself. As the change was made, gradually during this twelve months, you cannot realize how much you have changed. Your behavior back at home, your behavior will be very strange from the eyes of friends and family, and so on. It was very, very important; a very kind arrangement. These things have to be put in our own training program in Korea today. But I don’t think many of the training programs included such a very cautious arrangement.

Goldstein:

Well, when you returned to Korea, did you notice that you approached your job differently?

Kim:

I don’t remember what I felt. I can’t recall the difference. Or I didn’t experience the difficulties. However, ten or twenty years later, when I had a different opinion, a different view from my colleagues, I was wondering why. How did this difference come? And very often I recollect my old memories or old lessons obtained during this training period. The difference would not come so soon after I graduated. It came up after many, many years.

Goldstein:

It lies dormant for a while.

Kim:

That was my experience.

Goldstein:

Okay, so let me just be certain about this. You came to America in this program in 1961?

Kim:

Yes.

Goldstein:

And stayed for one year?

Kim:

Yes.

Goldstein:

And the program took you to four or five different locations. And then you returned after the year.

Kim:

Yes.

Goldstein:

So then what happened?

Kim:

Well then I worked for the Ministry and I had two or three years to fulfill my obligation.

Goldstein:

Oh, when you started with the Ministry, there was a seven-year contract or something?

Kim:

No, because of this training I had two or three years of service.

Goldstein:

There was a contract that you would go for the training and then work for the Ministry for two years?

Gold Star Manufacturing

Products and finances

Kim:

Yes. And then I joined Gold Star at that time.

Goldstein:

Gold Star had then formed in 1958, is that right?

Kim:

In 1958, and they started the production of transistor radios. I should have brought you to the corporate museum. This is a very nice place to explain how the development was made.

Goldstein:

What was your position at Gold Star when you started?

Kim:

I was the telecommunications project engineer, in the telecommunications division of Gold Star. At that time Gold Star had the consumer division and the telecommunications division. Consumer division, of course, they started in 1958. They started the production of the transistor radio, which of course they started this vacuum tube radio. Five tubes design.

Goldstein:

Yes, all the radios in America at that time had that five tubes design.

Kim:

And then they started the transistor radio in 1960 or 1961. And in 1964, they started the production of mechanic telephone systems.

Goldstein:

In all these cases, do you know if the primary market was domestic, or was it for export?

Kim:

Domestic, of course. Especially the telephone switching equipment. The end user was the Ministry of Communications.

Goldstein:

Korea Telecom?

Kim:

This was the only customer.

Goldstein:

Do you know, was it a completely private enterprise, or was it government subsidized?

Kim:

Who was?

Goldstein:

Gold Star Manufacturing.

Kim:

One hundred percent private.

Goldstein:

Really?

Kim:

Of course, at that time the Korean government supported the private industries in many respects. And the government endorsed the foreign loan.

Goldstein:

I’m not sure what you mean?

Kim:

“Endorsed” is not a good word?

Goldstein:

No, “endorsed” may be right.

Kim:

They guaranteed the loans.

Goldstein:

Right. So that’s one example of how the government supported it.

Kim:

However, Gold Star was the first company who borrowed the money from a foreign country company without government guarantee.

Goldstein:

Where did their collateral come from? How were they able to do that?

Kim:

Based on the personal relationship, based on the personal trust. The supplier was a German company. The founder of LG, just by trust, he had a very good private personal relationship with this company.

Goldstein:

The company in Germany?

Kim:

Yes.

Goldstein:

Do you know the name?

Kim:

Friermaster.

Goldstein:

I’ve heard about Friermaster before. It seems like they were very active in Korea.

Kim:

Yes. This is not the very large one, but they gave a private loan without government guarantee.

Goldstein:


Do you know when that was? This first loan?

Kim:

1963.

Goldstein:

So this was shortly after Korea’s first five-year economic development plan?

Kim:

Yes, in 1963. Five million deutsche marks. That's one and a quarter million U.S. dollars.

Goldstein:

And this was money Gold Star used to get started in building switching equipment?

Kim:

No, not only switching equipment. I should say that the first five million marks was from Friermaster company was used for the consumer trust electric meter. For the watt hour meter we borrowed another five million marks from the U.S. We built the production facilities. We bought the production facilities, and started production.

Goldstein:

Was LG a private company, or public company, at that time?

Kim:

No, it was private. In 1970 or 1971 Gold Star became a public company. And then the telecommunications part was separated from the Gold Star, and this telecommunications became a joint venture with Genus and Fuji of Japan, in 1970 and in 1974 the Gold Star Communications became a public company.

Governmental planning and projects

Goldstein:

Okay, but we’re still back in 1963, I guess. And so you were a project manager in telecommunications. Can you describe for me some of the projects that you would manage and what your resources were, and what the challenges were in doing them?

Kim:

As the government was the only customer, we had to know the planning in advance. But with this government system, this government bureaucratic system, it was very difficult to forecast their demand. They would go on an annual basis.

Goldstein:

Their long term planning was not good?

Kim:

For the industry. We had to prepare ourselves for at least the coming three years. Otherwise, we could not do any business. So, it was a very difficult job.

Goldstein:

Well, why was the government planning so short term? Was it because of political instability?

Kim:

No, it was because of the bureaucratic system. They had a nice plan for five years. Okay? How many lines, and how many number of lines in the next year, and the next year, and so on. But it is not enough for us to prepare for that. We had to know. We had to know what type of equipment, or the number of [inaudible phrase]

Goldstein:

So, there was no technical specifications given to you?

Kim:

For very detailed specifications. And the quantity and the exact date of the starting of an operation. For that, we needed at least many months, twenty-four months, because not everything was produced in Korea. It was kind of a semi-knocked down type of production. So, we had to place the order prior, twenty-four months in advance. But according to the government operations, they cannot commit it. It was a very, very unreasonable system. But, they don’t mind, because it’s a law. It’s a regulation.

Goldstein:

Were there occasions where Gold Star was left with a large order for equipment and no customer?

Kim:

Yes. They said, “We’ll buy, let’s say, 20,000 lights.” Well, 20,000 lights doesn’t mean anything to me. We needed a very specific requirement. No, not fixed.

Goldstein:

So, what would Gold Star do if the government purchaser didn’t come through?

Kim:

Well, they said, “It’s your own risk.”

Goldstein:

So then what do you do?

Kim:

Well, it was a very difficult job, a very, very difficult job, to estimate it or to minimize the risk. A kind of operational research type of planning. But, on one hand this kind of preparation, on the other hand [inaudible phrase] to the customer.

Goldstein:

Oh, so you could use your personal connections with the government officials to try to coerce them to coerce them into buying the equipment that you have now prepared?

Kim:

Yes. It was a very difficult, but challenging job.

Evolution of Korean electronics industries

Goldstein:

You just handed me a bound book called Self Reliance in Science and Technology for National Development of Korea. And this was submitted to the United Nations University in July, 1986.

Kim:

A very small part of it is the case study of the electronics industry. When I said there was the development of electronic industries here in Korea, up to ‘86, you know, I said there are five steps. The first one was random exploration. We did not know what to do, where to go, with what kind of resources.

[End of tape 1, side a]

Goldstein:

So you were saying step one would be the random exploration?

Kim:

And we had nothing. Practically, we had nothing. I recall the period. In Korea, people were thinking the best car driver could be the best car manufacturer, or something like that. And what we had was those-- Well, we recruited, we collected the person, the experienced person, to the company. But people available at that time were the very good repairmen of the radio shop, or say those that had the job experience in the assembly line, an assembly worker in the Japanese company. Or something like that.

Design and mass production

Goldstein:

So you’re saying you accelerated technicians and asked them to serve as engineers?

Kim:

Exactly. And those graduates from the college, they do not have the experience. Of course, because what they said was “experience” was that they assembled the personal radio during the summer vacation. It was kind of an engineering sample. So, we did not know the difference between building engineering sample and mass production in the assembly line.

Goldstein:

The engineering sample, you mean what we would call prototype?

Kim:

Prototype. This was the first step. And Gold Star employed one German engineer. I don’t know whether we can call him an engineer or not, you know? But at that time, he was the best. His qualification from our point of view of today is questionable. However, on the other hand we have to admit that even this less qualified German person. Even though he’s 60, still, I don’t think he could bring Koreans up to 30 even, because of the lack of preparedness of Koreans.

Goldstein:

He was supposed to provide technical leadership for the design staff?

Kim:

We shouldn’t say “design”; just followed the instruction of assembly.

Goldstein:

Now, was this for the telecommunication systems?

Kim:

I’m talking about for the consumer.

Goldstein:

Okay, for the consumer division.

Kim:

As the reserve of this experience, they became to know that the building of prototype and the mass production was entirely different things. It took us maybe four or five years. And then we became to know that we needed some kind of technical assistance from outside, and we tried to go around and look for the technical sources.

Goldstein:

And what was the strategy for bringing that technical expertise in?

Kim:

Well, because of this personal relationship with this Friermaster Company, a German was brought in. But, not much successful. And in this case, they were the single person. In other words, they were not backed up by the large organization, or large corporation. So the next step was going to Japan, or Japanese assistance, looking for assistance from a Japanese company, Hitachi or Fuji.

Corporate partnerships, Hitachi

Goldstein:

Would you approach individuals, or would you try to form a corporate partnership with companies?

Kim:

That was what we were looking for.

Goldstein:

So you would approach Hitachi and say, “We want to form an alliance with you.”

Kim:

The first products with which the Gold Star wanted to have the technical assistance was the watt hour meter. However, with most of the Japanese companies, this proposal was rejected. They said, “You cannot make watt hour meter with machine only. It’s too early for you. You cannot do that.” You have facilities, okay, understand that. It cannot be introduced only with a machine.”

Goldstein:

So they said you needed more worker training to make the machines work?

Kim:

Engineers and workers, and so-on. Most of them, they would just reject it.

Goldstein:

Most of the companies?

Kim:

Most of the companies. Only Hitachi said, “Well, let’s try.”

Goldstein:

Do you know why Hitachi was more open?

Kim:

I don’t know. They started helping us. And after several of the trials, finally they started production with our meter.

Goldstein:

Well, with the Korean Power Company, were they interested in stimulating Korean industry? Were they committed to buying Gold Star’s watt hour meters?

Kim:

Well, they had been encouraging us. Even to them, it was very difficult to commit. If the equipment goes wrong, it would be a very big damage. It was very difficult to commit.

Goldstein:

What was the competition? Was it Japanese products, or U.S. products?

Kim:

First, of course, was Japanese products at that time, as well as the consumers. The watt hour meters [unintelligible word] the Japanese were dominating this area. Not the U.S.

Goldstein:

So what did Gold Star offer to Hitachi in this alliance?

Kim:

The royalties and procurement of parts. It was almost the same time the Gold Star started this seeking equipment production.

Procurement and contracts

Goldstein:

So we’re talking about the late ‘50s and early ‘60s?

Kim:

Yes. In this case the Germans were the first to come. The U.S., they were not interested much. The first equipment, of course, was supplied by a U.S. company. A very old type of [inaudible] seeking equipment. But, it was supplied through military aid. So, it was kind of a one-shot business. After selling it, they didn’t make any more. Why? The Germans came in. And very strange enough, you know, at that time this German equipment was procured with American aid.

Goldstein:

So American Foreign Aid went to the Korean government, and that money was used to buy German equipment?

Kim:

Yes. At that time the U.S. was very generous. This procurement procedure was handled by a U.S. agent here. But, they say okay, open bidding worldwide. And at that time the standardization was considered, especially for this telephone system, the transistor, by this U.S. agency, the U.S. agency here, procurement agency. Equipment, or the system, which is awarded in this, the open bid project, would be and should be the Korean step. But Germany was awarded it. So they said okay, it’s German. This is the standard.

Goldstein:

That is amazing.

Kim:

So, the contract was awarded, the equipment came in, as complete shipment imported, and stored. That was my job in the Ministry.

Goldstein:

This was, you said, mechanical switching equipment?

Kim:

After three years, the Korean government said, “The equipment should be locally manufactured. It’s a must.” So, the original supplier came in, and looked around the department.

Goldstein:

So, Siemens wanted to stay involved in the business, so they wanted to form an alliance with a Korean company, who would manufacture the equipment locally?

Kim:

Yes. They came to Gold Star and found this nice facility for manufacturing the watt hour meter. And they said, “This is the best one.” And then there was the five million deutsche mark loan, for the facilities they bought, and they brought the technical persons, and they started manufacturing this equipment. On the other hand, in the consumer division they started the production of black and white televisions and refrigerators. It was a very interesting story. None of those engineers in this refrigerator manufacturing department had their own refrigerators in their houses.

Goldstein:

So who were they for?

Kim:

Well, the rich people. And military. Everything just looks nice.

Goldstein:

At the surface it looks the same. It was the same, technically speaking?

Lucky Chemical Co.

Cosmetics business

Kim:

Yes. In Korea, as I told you, I should have brought you to the museum. We started a cosmetic business, a very primitive one. Anyway, at that time, the bottleneck of the business was not cosmetic itself.

Goldstein:

When you say “cosmetic,” you mean literally, like beauty?

Kim:

Yes.

Goldstein:

LG's first product was cosmetics?

Kim:

Yes. In ‘48, they started cosmetics.

Goldstein:

Oh, so it was still electronics that was founded in 1958?

Kim:

Yes.

Goldstein:

I understand.

Kim:

They produced this face cream, and put it into the container. A case. A small case. And capped-- but this cap was made of, at that time we called it, celluloid. A kind of plastic, but not. It was very fragile. At that time, these cases were recycled because of the shortage of the material. It should be recycled. Well, this case was all right, but the cap was fragile. So, we could not continue business. Without cap, how could you sell it?

Well, they had this trouble. And they thought they had to make it by themselves, the cap, plastic injection. And they bought an injection machine. They ordered an injection machine from the U.S. And we still have this machine in the museum. And they started making caps. Most fragile part of the container. At the same time, of course, they ordered the injection tool, and at the same time, the repairing tool. And then, utilizing this repairing tool, they made another tool for a spare, and they started making soap cases. You know, those plastic cases for soap? Or, the plastic comb.

Goldstein:

Combs for the hair?

Radio case, motor production

Kim:

Yes. Then they thought, “Why don’t we start making radio cases?”

Goldstein:

And then the electronics business was born out of the ability to make the case?

Kim:

Yes, it’s very simple. Five tubes, and only several wires. Well, that’s very easy. So, they started the production of cases. Not the radio business. The inside product was the bi-product. It looks very easy. Okay, some of the young people were interested. There was so many young students who built their own radios. It looks very easy, so they started. Of course, later they found it not so easy. However, originally they started from the outside. Okay, then they started thinking, “Well, what’s another business of plastic?” The blades of electric fan. The most difficult thing in manufacturing of this blade is this making balance of the three blades. If the balance is not good, this goes like this, you know?

Goldstein:

Because of its high rotational speed.

Kim:

And it’s very difficult to balance these three blades-- in good balance. If you make it in one injection, it’s very easy.

Goldstein:

You just make the die once.

Kim:

If you make the correct die once. That’s a good idea. So, they made it. And then, “Okay, the blade by itself doesn’t work, so, we need the motor.” So they started manufacturing motors. We didn’t have the [inaudible], so we started making without it.

Goldstein:

So, they had to create the whole industry, to build the motors, because if the industry was further developed, then Gold Star could have simply made the blades and sold them, to the existing industry. But, that’s hard in the case of radio, because the industry is so vast. You need broadcasters in order to make radios worthwhile.

Kim:

Oh, the government had the broadcasting system.

Goldstein:

Well then, if the government was broadcasting, doesn’t that mean that there already were radio manufacturers?

Kim:

No.

Goldstein:

Then, where were people getting their radios?

Kim:

Imported. We didn’t have any money, or foreign exchange, to import these. They were illegal. I told you of the switching equipment, but before switching equipment, we already started the production of telephone equipment.

Goldstein:

Right, the base unit.

Kim:

Not the sophisticated ones.

Goldstein:

Right.

Kim:

But, this is the same idea. “It looks very simple. This isn’t complicated. Very simple. Plastic. Why don’t we start it?” So, always the outside case was the first stimulator. And then, this one, the telephone becomes a telephone switching equipment, and radio communication equipment, etc. The radio, T.V.’s, and etc., etc. The electric fan. Motors. Refrigerator. The washing machine. Motors, and then electronics, comes to, let’s say, audio equipment, and then C.D.’s, etc. This is the way we have been developing.

Goldstein:

Okay. But I bet it wasn’t just accidental. I mean, Gold Star makes the cases.

Kim:

Actually, Lucky is making the cases.

Goldstein:

Oh, it’s Lucky?

Kim:

And Gold Star put the contents. And then this became a separate company, Gold Star.

Goldstein:

Okay, well, Lucky makes the cases. Well, they had a choice at that point, that they could have exported the cases, or they could have created the industry to build the insides for domestic production of finished products. And they chose the latter. They chose-- and that indicates a entrepreneurial spirit --- a goal of building up Korean industry.

Kim:

Well, you can say that. But, on the other hand I don’t think at that time, even though someone at Lucky wanted to export these cases, these cases, I’m sure, were not accepted by the foreign manufacturer. It was too poor.

Goldstein:

They may not have had a choice. Lucky may not have.

Kim:

Of course, we didn’t even try it, but I don’t think it was that.

Goldstein:

So in a way, it’s good for Korean industry that this equipment was poor.

Kim:

Poor.

Goldstein:

Well, I didn’t want to say it, but right.

Kim:

I don’t think they would have accepted it.

Lucky-Gold Star

Technical collaboration agreements

Goldstein:

All right. We were in the mid-1960s. You were telling me the story of how you were the project manager for the construction of telecommunication equipment.

Kim:

And we had been trying to get more technology from outside. And we named this agreement the technical collaboration. We had an interpretation, or we had an impression, that with this technology or technical collaboration agreement we could have everything. But when I read this agreement, I found this is not a technical collaboration agreement. In reality, this agreement was licensing of the production in a limited area. And this is the real meaning, in this agreement. The agreement said that, “Company A is going to give the right of sales (say number I don’t know) say, tech number so-and-so, within the territory of the Republic of Korea. In order to assist it, we would like to give you the drawings, the specifications, and we are willing to dispatch our engineers to help, etc.” So, manufacturing is a bi-product. In the main body of the agreement, it said the government, and the press, and even the head of the company, they beautified it. They named it “technical collaboration.” In reality, you can read it. [Unintelligible] this agreement!

Goldstein:

So, well, who wrote up these technical collaboration agreements? Were they drafted by the Korean companies?

Kim:

No. We were not qualified enough to draft such things. We didn’t know that. This is the international standard. If you like to amend it, modify it, okay, you can do that. We were not able to modify it. We didn’t know anything. Everybody sends it. So, I found it [unintelligible word] agreement, a license agreement. It would have a nice cover, with the name of it on the cover. For example, if you say, “We have the agreement with this model,” then already, even at that time, after two years, this is obsolete. We need a new model. We need a new agreement. So, we said, a technical collaboration agreement is not enough to improve our capability. We said we’d like to learn how to design it. And manufacturing can help in the designing. You can go to engineering company, or consulting company.

Goldstein:

When you say “we,” do you mean Lucky-Gold Star, or all Korean companies, sort of as a unified group?

Kim:

We were the first one. So, we faced these problems for the first time in this country. But soon they came to the same difficulties, the same conclusion I guess. We didn’t have any coordination for it. It’s a major consequence. And then, we heard of the equity joint venture. Instead of changing every year to a new agreement, we would then accept, or receive the equity, so that we can do the same company. If we became the same company, then we moved continuously forward.

Goldstein:

You're in the inside.

Equity joint ventures

Kim:

So, the next step was the equity joint venture. It was very nice because some additional information come through it. They were not so strict about the contract, or agreement. Let’s say, for example, something changed here. “Okay, we’ll get it." To a certain extent, to a certain level. They were generous. But this level, they don’t exceed, they don't jump. you know? But anyway, it was an improvement.

Goldstein:

But does that effect your profits, when you signed into an equity joint venture? How does that effect...?

Kim:

The profit, of course, we have to share. In the developing countries, even though we share, still the absolute amount of income is increasing because of this additional technology flowing in, inflow, and on top of it, the management technology. And we received, or accepted, a foreign manager here. But of course there are so many registers to receive these foreign managers. If we handled these problems properly, wisely, correctly, we could make much more profit. Even though we share it half and half, still, it’s more than before.

Goldstein:

So it was an important strategic move?

Kim:

However, there is one thing we began to understand, that this is not two joint companies. This is the joint of a very small part of a large company. In other words, let’s say we have this agreement. We did not have Sony, but let’s say Sony.

Goldstein:

Oh yeah, to be specific, can you tell me some of the companies that you did have? I don’t want to interrupt you. You can finish your point. I’m sorry.

Kim:

Sony, let’s say Sony had a very new and different business. They say, “No, this is different story.” Even though we say equity joint venture, still, of this large this organization we're only a very small part. And this is one problem. And the other problem, when we were very small, this was very small. However, when it grew to a certain level, and tried to export, there is a conflict of interest in the other market.

Goldstein:

Because you are conflicting directly with your partner?

Kim:

Right. And that’s kind of a restriction or limitation of commerce.

Goldstein:

And there’s a natural limit.

Kim:

That’s one thing we have learned, in several, or ten years.

Goldstein:

Well, in Lucky-Gold Star’s case, what were the years of this stage?

Kim:

1970s.

Goldstein:

And who were some of the partners?

Kim:

Oh, we had many, many joint ventures. We started in Caltex, the oil company. And then Carbon Black. They use to be put into the tire of the automobile. I mean, if you did not put this in, it would wear out very soon. The tire would really wear. And then we came into a joint venture with Siemens, Fuji and NEC

Goldstein:

Fuji, NEC and Mitsubishi, are all Japanese companies.

Kim:

So many we made.

Goldstein:

And they each were for a specific product.

Kim:

Yes. Companies are the most important products of my company.

Goldstein:

So every time there was an agreed joint venture, Lucky-Gold Star had a new company under it?

Kim:

Companies are the most important product.

Goldstein:

Right. And that was your role in the company at that time? You would create the relationship and start the new company?

Original Equipment Manufacturing

Kim:

Right. And on the other hand that stage, stage number three, the other strategy we had was so to say “O-E-M.”

Goldstein:

Original Equipment Manufacturing.

Kim:

In order to promote the export business. At that time, OEM was the only way to. We had learned indirectly how to design.

Goldstein:

Is that a reverse engineering process?

Kim:

Yes. However, before that, we were given only one model.

[End of tape 1, side b]

Okay, if we could find the opportunity to compare the various OEM buyers of the pieces. The difficulty was we could not secure our own market. It was their market. It was a steady limitation.

Goldstein:

So, you needed to get out of these OEM agreements?

Kim:

OEM agreements, or joint ventures. No, we did not mean terminate it, but had to change our direction. The next stage was the imitation, or modification. When you survey the market, and if you find a good model, just imitate it, modify it.

Patents, design, and intellectual property

Goldstein:

Is there an issue there with patent protection?

Kim:

Of course. But we were not so strong enough to draw their attention.

Goldstein:

Oh really?

Kim:

At the beginning.

Goldstein:

And that’s for domestic sale?

Kim:

Domestic sale. The properties are small. The volumes are small. How to copy it. That’s a technology. Maybe the next step will help to modify it. A little bit.

Goldstein:

Did you maybe add some features?

Kim:

Some changes.

Goldstein:

Perhaps maybe make a less expensive design?

Kim:

Not yet. The imitation requires a very, very high technology. It is not so easy.

Goldstein:

Right. And at this time you had some indigenous engineering talent, because the schools had been operating?

Kim:

Imitation was the next stage.

Goldstein:

This was in the early 1980s?

Kim:

Yes. And very soon you face the intellectual property problem. Problems, etc. So next stage, of course, was technology development. That we had been looking for, well of course, for long, long years. But everybody has a different opinion, a different view.

Korean industry and technology transfer, international collaborations

Goldstein:

It probably depends on the industry. Well, for Lucky-Gold Star, what were some of the early products that were home grown?

Kim:

I have been out of this part of it for seven years. So, you better ask Ling. But one thing I can tell you, the strengths of the Korean industry, especially the electronics and electric industry are chemicals and constructions. The strengths of Korea, those people who have an experience in the very, very primitive stage of the manual manufacturing and semi-automatic. I shouldn’t say 100 percent, but full only experience, those people are still in active service in Korea. This is a very unique situation. In other words, those advanced countries, those engineers and managers now in work, they do not know about manual things. They know how they do it, they push buttons.

Goldstein:

Right. They never saw the transition.

Kim:

While the other less developed countries they do not have such people, who have this kind of experience.

Goldstein:

So what did that bring to the Korean industry?

Kim:

We could be good consultants or advisors to the less developed countries for the industrialization. In other words, the advanced countries, they can bring their modern technology to the less developed countries. They cannot use it.

Goldstein:

It gives Korea an advantage at technology transfer because they can understand new context better?

Kim:

And difficulties in each stage of development.

Goldstein:

So does that help when you were building a production facility in Malaysia, say?

Kim:

Malaysia was developed.

Goldstein:

That was developed. Well, that is developed.

Kim:

Yes, developed. I’m telling my people this example. When we were in the stage of technical collaboration that we made a decision. They said, “We visit the advanced companies and ask for this technology.” They said, “You know, it's not matured. You have to wait.” In Korea, at that time, we used to say, “They are refraining from giving this technology to us. They are afraid we are coming to their market.” That is not true. Maybe in some cases it’s true, but generally speaking it’s not true. We got experienced by ourselves. We gave some model of this kind of equipment to Africa. The negotiation was going very well, and we [unintelligible passage] their delegation was very much satisfied. Everything was open. At the last day of their visit, they came to the President’s office to say good-bye, and they found very new model, nice looking. They became upset. “You have this nice one. And you gave us this old one. I would not like to implement this contract. I would like to break this contract.” And we said, “No, this is not the equipment yet. This is just for test purpose in the President's office.” "Doesn't it work?" "Does it work!" And it did work. It worked. And we explained this and that, and this and that. “You are giving us second hand technology.” This is less developed countries, always shouting. We did, and most of Koreans still are passionate. For technical purpose, in order to make negotiation better for us, we can utilize these tactics, but if you really believe it, it works. You know that to make the negotiation, to cut down the amount of royalty, the percentage for royalty, okay, you can use that --- any logic. But, if you believe it, no. “We cannot give it because we do not have the manufacturing documents here.” How can we do that?

Goldstein:

Right. You were saying before that there is an important gap between developing it and learning how to manufacture it. And this product is still in that process.

Kim:

They don’t understand. Some Koreans still do not understand it.

Goldstein:

So, now that you’ve had that experience from the other side, does it effect the way you make negotiations with other more advanced countries?

Kim:

I don’t get your point.

Goldstein:

Now you had this experience, say with telephones, from the side of being an advanced country working with a less developed one. So now if you are negotiating with a more developed country for different technology, does it effect the way you-- does it effect your desires for the negotiation?

Kim:

As I understand this situation correctly, maybe I could ask that my intention be contemplated by the other side. Not shouting. Or blaming them. If you are shouting or start blaming the other side, you cannot find any reasonable solution. As I understand the problem, if you say, “No, it is not available,” then it maybe, if you have the engineering drawing, not manufacturing, “could we discuss the engineering?” Or, if they say, “No,” then, “If you do not like to discuss this part of engineering, this part of drawing, okay, let’s keep it secret.” How about this. Okay, I can approach in a more productive way. But if I had a wrong interpretation from that you were hiding something, or you are refraining, then that becomes much more emotional issue.

Goldstein:

When did you start to understand the stages as you’ve described them here?

Kim:

I don’t know. But when I was requested to make this case study, I just formulate the idea which I had been thinking of.

Goldstein:

Is that a historical description, or is it a blue print? Or, I wonder if you believe that it’s necessary to go through those stages, or is it simply just a historical description of how it happened?

Kim:

That’s a very, very good question. Very, very good question. Maybe this is a little bit apart from our discussion with Korea. Many people, they think now, in very powerful press, they said, "You know, even though we are behind in industrialization, we should not be late for information.” I am very much suspicious. I don’t agree with that. This is a kind of consensus here in this country. In other words, they can skip this stage, industrialization stage, manufacturing stage, and jump into the information stage. I don’t think so. Many people, they believe in this theory. So I’m going to be with the School of International Studies at John Hopkins next year to study this. If someone can skip this stage, the industrialization stage, and directly come into information stage, or not. In other words, what is the cultural infrastructure for the industrialization? And what is the cultural infrastructure for the information stage? What is the criteria, or element? Well, of course, what is the cultural infrastructure of the agricultural or pre-modern society? And comparing these criteria, or factors, I would like to come to the conclusion that if we can skip it or not.

Goldstein:

I like that term “cultural infrastructure.” Can you tell me more about what you mean?

Kim:

As I told you, the industry, the full industrialization, people here in this country now, for example of automobile industry, they think we made a very good designed engine here. And if we design the number one car in the world, we will be the number one automobile industry, in the world. I don’t agree. And their way of thinking, their policies were to educate people. "Well, we have to educate these people." Better to be educated in Japan or the US. Much easier, much cheaper. But, manufacturing, we need accuracy, control, reasonable way of thinking. What I am emphasizing in the training center, the education center, okay, “Whenever you stand up, you push your chair under the table.” That is the first step of quality. Quality, secured quality. Quality assurance. Quality management. It does not mean those Ph.D. theories. There are so many typists in this country, and they have first grade, and so-on, and so-on, licenses. Whenever I had a new typist, “How good can you type?” “Well, I have first grade license at this.” “Okay. You type this.” What I found was they did not have proofreading, just typing. Well, they taught the skill, but they did not teach the behavior of making proofreading. This is a cultural problem. With this culture, you cannot guarantee your quality. If you cannot guarantee your quality, industrialization cannot be accomplished.

Goldstein:

So, you need the line worker to participate in the quality production process?

Kim:

Not only for the quality, but also for reasonable rationality. That is very important. Not only the assembly or manufacturing worker, but the office, the top management. Rationality is very important for industrialization.

LG Academy; Gold Star R&D lab

Goldstein:

This leads us to this part of your career. Can you tell me how you began at the LG Academy, and what you do here?

Kim:

At LG Academy, I don’t think we have a very good consensus. You know, the people, it’s a trend, a worldwide trend, that the leadership training is the most important thing. Of course, leadership is very important.

Goldstein:

When did you begin working at the LG Academy?

Kim:

Seven years ago.

Goldstein:

Seven years ago. So that was, you said, during the 1980s. That’s when you were assigning negotiating agreements, whether their companies import.

Kim:

Well, at that time I was mostly in the self development of products. And just two times was in charge of Gold Star in the center.

Goldstein:

Okay, well I think we were starting to talk about how you got involved with the LG Academy. Well, you were head of the R&D lab.

Kim:

Yes.

Goldstein:

And when you were head of the R&D lab, was that during the time of the transition to original designs?

Kim:

Yes.

Goldstein:

When was Gold Star’s R&D lab formed?

Kim:

Officially, it started in ‘78. And I was in charge of this organization in ‘82 and then again in ‘88. During the first term, the organization was responsible for the consumers and the PC. At the later term was responsible for all electronics. That was four years, in charge of the center.

Goldstein:

And you had a role in shaping it’s style?

Kim:

That’s a difficult job, you know? It’s difficult to give direction of this kind of new organization. I don’t mean new on the paper; new in concept. In a developing country, such as Korea, new things, new ideas are coming. The interpretation is different. So, it’s very difficult to orientate people to new and different things.

Goldstein:

I know we want to wrap this up, but could you just give me one example of what you mean when you say this?

Kim:

Well, at the very early stage a research institute, good name, and once a full secretary from the U.S. Embassy came to visit my office, and he asked me, “How much is the R&D expense?” I said, “We don’t have any R&D.” “What do you mean by that?” “We have 10% of “D” and 90% of “E,” so D and E is the right name. We don’t have “R.” But, he was very much satisfied with this expression, with this explanation. But just for example, let’s say, some people, some members of the Center, they said, “For research, we should have freedom — one hundred percent freedom. Only from the one hundred percent of freedom we can get the new idea.” That’s why I don’t like R&D. For real research you need one hundred percent of freedom. And what we are doing here now is not the research. It’s even not the development. What we are doing is reverse engineering. For reverse engineering, we don’t need the freedom. We need the discipline. So, they have a misunderstanding.

Goldstein:

They’re trying to take the company one step further than it’s ready to be.

Kim:

They do not know what they are doing. They think what they are doing is research. And in the technical magazines and everywhere it is said that for researcher, they need freedom from red tape. This is true in the very advanced companies in the advanced countries. Even in the less advanced countries, less advanced companies are doing engineering. They are not doing such research work. But because of the same name we are using, they think of themselves a researcher.

Goldstein:

They let the label define them. That’s a mistake.

Kim:

This is the most important problem less developed countries have. They don’t talk about it. I always say, half-jokingly, this theory or talk about information age is joint conspiracy made by advanced countries to protect themselves from these very high speed catching up powers of the less advanced people. They are not qualified to talk about information age. They are not yet at the industrialization. But in order to confuse them, they are talking about information age. Every people, everybody, should realize to be strict where he is now. Otherwise, you will waste your energy, you will waste your resources. Okay? Final target should be dutiful. But, first tentative target should be much more realistic.

Goldstein:

And this is the ideology behind your work here at the LG Academy?

Kim:

No. I try to do that, but this is very, very small voice.

Goldstein:

Does the LG Academy train management at Lucky-Gold Star?

Kim:

Yes.

Goldstein:

But you were saying that the first order of business is training the employees?

Kim:

I should say the general public.

Goldstein:

Exactly. Should I stop this now?

Kim:

Okay.

[End of interview]