Oral-History:Ki Sun Han

About Ki Sun Han

Born in 1927, Ki Sun Han studied electronics engineering at Seoul National University, graduating in 1957 after his military service during the Korean War. From 1957 through 1963, Mr. Han worked as an engineer at the HLKZ-TV station, American Forces Korean National Television (AFKN), and the Korean Broadcasting Systems (KBS). In 1963 he joined the Tonyung Broadcasting Company (TBC), a broadcasting company jointly established by Samsung, Gold Star, and other companies. In 1969, Mr. Han moved to a position at Samsung Electronics, and he became the company's CEO in 1973. At the time of this 1996 interview, Ki Sun Han served as a senior advisor on Japanese business to Samsung's CEO.

In this interview, Mr. Han summarizes his work to develop equipment systems at TBC, desribing this network's programming and markets. He then details the manufacturing and marketing of color television sets by Samsung and competitors. He traces the corporate growth of Samsung by describing corporate acquisitions, export markets, and governmental contracts. The interview analyzes the Korean government's role in the telecommunications industry, desribing its selection of the Western Electric system over the ITT system. Mr. Han then describes the formation of the Electric and Telecommunications Research Institute (ETRI) and the development of TDX. Mr. Han concludes by describing Samsung's corporate structure and business models, analyzing the complexity of Korean economics, as well as the function of Samsung within the Korean economy.

About the Interview

KI SUN HAN: An Interview Conducted by Andrew Goldstein, Center for the History of Electrical Engineering, 21 August 1996

Interview #310 for the Center for the History of Electrical Engineering, The Institute of Electrical and Electronics Engineers, 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, 39 Union Street, New Brunswick, NJ 08901-8538 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:

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

Interview

INTERVIEW: Ki Sun Han

INTERVIEWER: Andrew Goldstein

DATE: 21 August 1996

PLACE: Seoul, South Korea

Career summary

Interpreter:

Chairman Han was born in March 1927. He served as an army [inaudible word] during the Korean War. He graduated from Seoul National University in 1957. He worked for HLKZ-TV before he graduated.

Goldstein:

That is HLKZ-TV.

Interpreter:

There was a company named Parkod that was the Korea RCA distributor, which is the company distributes RCA products.

Goldstein:

Right.

Interpreter:

After that he joined to AFKN, American Forces Korean National Television, in 1957. And he moved to KBS, Korean Broadcasting Systems. Then he joined TBC, Tonyung Broadcasting Company, in 1963.

Goldstein:

TBC.

Interpreter:

TBC is a broadcasting company jointly established by Samsung and Gold Star and some other companies. In 1969, Samsung Electronics Company was established. In December Samsung-Sanyo was established and in January of 1970 Samsung-NEC was established. In 1973 Samsung-Sanyo Parts was established, and the same year Samsung-Corning was established too.

Interpreter:

In September of 1973 Mr. Han was assigned to Samsung Electronics and he became the CEO of the company in November 1st.

Goldstein:

Okay, when you say he was assigned there, had he been working in Samsung?

Interpreter:

Right. TBC is part of Samsung.

Goldstein:

Of course. Although it existed before that.

Interpreter:

Right. Mr. Han joined the TBC in 1963. So he worked there for 6 years and then moved to Samsung Electronics. Outside of Samsung, in October of 1958, Gold Star Company was established. In December of 1961, KBS Television started its broadcasting. And during the years '62 and '64 Gold Star expanded its operation and relationship with Formeister and Siemens and is started the business of EMD, the mechanical switching system.

Goldstein:

EMD. Can you tell me the name, you said one of the companies was Siemens, but what was the name of the other company?

Interpreter:

Formeister.

Goldstein:

Formeister. But it's a German company?

Interpreter:

Yes.

Goldstein:

And they had the telephone exchange equipment called EMD

Interpreter:

No. Formeister is kind of a trading company which arranged the foreign loans for Gold Star.

Goldstein:

No, I meant Gold Star worked with Siemens on the EMD, which was switching equipment, mechanical switching. Well. KBS, the Korean Broadcasting System, now was that a, was that just one station, one state run station, and were there others?

Interpreter:

I think that there was AFKN.

Goldstein:

Which was operated by the American Armed Forces.

Interpreter:

Right. There was HLKZ, which is private, but it was burned down 1959 because of fire it diminished.

Goldstein:

I see. And what was his job at the radio station? Was he a broadcast engineer? At the TV stations.

Interpreter:

He was [inaudible word] engineer. He was an engineer at HLKZ and AFKN.

Goldstein:

And that's what his education was in, was in engineering, electronics engineering?

Interpreter:

His major was electronics engineering.

Goldstein:

I see.

Interpreter:

When Gold Star Company was established, Mr. Han was working for Colcott.

Goldstein:

Yes.

Interpreter:

And he was in the business part, and he saw the vacuum tubes to Gold Star, and Gold Star started to manufacture the radio with those vacuum tubes.

Goldstein:

I'm not sure I understand how TBC became part of Samsung.

Interpreter:

It's almost a major investor.

Goldstein:

Okay. So when Samsung got started in 1969, they then purchased a controlling interest in TBC?

Interpreter:

Yes, TBC was established in 1963.

Goldstein:

But Samsung didn't exist until 1969, isn't that?

Interpreter:

No. Samsung Group started from 1938. But Samsung Electronics Company was established in 1969.

Goldstein:

Okay.

Interpreter:

And before that, in 1963 TBC was established.

Goldstein:

So you were working for the Korea RCA distributor and that selling to LG, and how did you become involved with Mr. Kung and Samsung?

TBC; collaborations with Kung

Interpreter:

Mr. Han and Mr. Kung, even when they were in the college even before they graduated they had a relationship. They had known each other for a long time, so when Mr. Kung joined to TBC, Mr. Kung scouted Mr. Han. Many people, not just Mr. Han. Mr. [inaudible word] Kim and some other people.

Goldstein:

So he said come, come work for TBC. And you were an engineer there?

Interpreter:

Yes, an engineer also. As an engineer he joined TBC.

Goldstein:

Can you tell me, give me a sense of what sort of things you were working on, you and Mr. Kung?

Interpreter:

At TBC?

Goldstein:

Yes.

Interpreter:

So when they joined to TBC, Mr. Kung was the head of engineering group and Mr. Han was the manager of the subgroup in engineering factor.

Goldstein:

See, I don't know what engineering they were doing. Did they have to design equipment or operate equipment?

Interpreter:

At the beginning they should have a bid, the [inaudible word] themselves as I explained before. Due to the lack of foreign currencies, they couldn't import the equipment. So they built most of the broadcasting equipment themselves.

Goldstein:

Right.

Interpreter:

The first story is written here in this book. It is hard to build all the equipment for a broadcasting station. Except a video tape recorder, except a VCR, all the things they should have built. [inaudible phrase] made the transmitter machine, transmitter equipment in [inaudible phrase], so a microwave link system.

Goldstein:

Microwave link.

Interpreter:

You know, so [inaudible phrase] was a link system, so synchronizing duration equipment, camera, including camera, physical camera, the [inaudible word] camera, studio camera.

Goldstein:

The studio camera.

Interpreter:

[inaudible word] everything.

Goldstein:

Well, where did you learn how to make them? Was that from your training?

Interpreter:

No training really. Mr. Han has experience of assembling and building the equipment and the camera himself while he was working for AFKN, and I think that experience helped. He visited many broadcasting companies and broadcast equipment companies before starting, before he started the TBC.

Goldstein:

So did TBC have enough money to allow you to develop all this equipment? Was there a shortage of money or was there a lot?

Interpreter:

They had money, but no foreign currency to buy. That's important.

Goldstein:

So were all the components Korean made also?

Interpreter:

Not all of them. Many of them, but they purchased even second hand the components which they could find at the junk store.

Goldstein:

So, what sort of programs did they broadcast, and where did that programming come from?

Interpreter:

The content you mean.

Goldstein:

Yes.

Interpreter:

News and drama and some foreign movies.

Goldstein:

And was there a big audience at that time?

Interpreter:

Not. There couldn't be because of the limited number of color TV sets sold in the Korean market.

Goldstein:

This was still black and white, wasn't it?

Interpreter:

Yes. Among the board of directors of TBC, there was worry about whether they can broadcast successfully or not using this handmade equipment. So one executive says maybe we should broadcast all the time, "Sorry our broadcasting is interrupted," or something like that, and then the other executive says, "If we can broadcast story, then we should say it's successful. Because it still is broadcasting." The members worked for TBC engineering, they were use to making everything themselves.

Goldstein:

And TBC was broadcasting in the Seoul area, is that right?

Interpreter:

Seoul and Pusan.

Goldstein:

Okay. So there were two stations. So it was a network.

Interpreter:

The TBC was acquired by the government in 1980.

Goldstein:

I see. Had it grown by then?

Interpreter:

The military government took it from Samsung. They took it saying a private company cannot own the broadcasting company. It was their rationale.

Goldstein:

Okay. I think that's everything about that period. I did have one other question about this. Did TBC sell advertising?

Interpreter:

Yes.

Goldstein:

Okay.

Samsung Electronics, color television sets and VCRs

Interpreter:

In 1977 Samsung Electronics started the export of a color television to Panama.

Goldstein:

To Panama?

Interpreter:

Yes. So, the distributor of Sony [inaudible]. Samsung had difficulty acquiring the components and parts to build color TV sets. At that time Matsushita was the only company which is willing to supply the parts.

Goldstein:

Right. The other Japanese companies had refused to license, had refused to supply.

Interpreter:

All others refused to supply. And then when Matsushita started to supply, they all came again and then started to supply. So the cost for the color TV model, export model, used 14" tube from Matsushita, but 19" model used Toshiba's tube.

Goldstein:

Toshiba's tube.

Interpreter:

And in 1978 the amount of export exceeded a hundred million dollars.

Goldstein:

Okay, but at that point that wasn't just to Panama. Now you had been exporting to the U.S. and other countries.

Interpreter:

Yes, some other countries, including United States. So in 1978 a hundred million dollar export was achieved in December. It could have been earlier than December, but there was a fire, there was a big fire in November, so then the achievement of a hundred million dollar export.

Goldstein:

Delayed it.

Interpreter:

In June of '79 Samsung started manufacturing for the VCR market, VCR model, and microwave also at the same time. By the end of November in 1980 it achieved a two hundred million dollar export.

Samsung corporate growth

Goldstein:

And did you want finish this section, or can I ask questions about?

Interpreter:

Okay. Then in 1974, as you heard from Mr. Kung, the Korea Semiconductor was established as a venture company, joint company with ICII. In December, Samsung Electronics acquired the stocks of Korea Semiconductor. In '77 it completed the acquisition of Korea Semiconductor. So it became Samsung.

Goldstein:

Right.

Interpreter:

At the beginning it produced the chip for the clock.

Goldstein:

Right, for digital watches.

Interpreter:

But because of a battery problem, the life cycle wasn't long enough. After that Samsung tried to produce ACD driver and some transistors, but it couldn't make a profit for a while. So until 1982 even with hard work and hope for the profit, the business was not profitable. But, that effort and experience was, became the base and fundamental of our business.

Goldstein:

I see.

Korean telecommunications market; Samsung GTE

Interpreter:

The Korean market of telecommunication was shared by Gold Star and OPC, Oriental [inaudible word] Company.

Goldstein:

Okay. Is that a Korean company?

Interpreter:

Gold Star [inaudible phrase].

Goldstein:

I don't know what that is.

Interpreter:

It's a step-by-step system.

Goldstein:

Oh, step-by-step system? Okay.

Interpreter:

So the market was shared by those two companies. So it was very hard to get in.

Goldstein:

And the customer was Korea Telecom?

Interpreter:

Right. In 1977 GTE, a telecommunications company, wanted to get into Korean market and was looking for partner. So Samsung became partner of GTE and established Samsung GTE, mostly for PBX manufacture. There is an institute named Korean Institute of Science and Technology which is a government operated institute, and KIST at the time was developing an electronic switching system.

Goldstein:

Okay.

Interpreter:

GTE funded five hundred thousand dollars to KIST, K-I-S-T, to develop the ESS, Electronic Switching System, and then GTE started it as business with that model developed by KIST and they established a joint company with Samsung. So the aim of GTE to fund and establish a joint company was that they had a vision that the electronic switching market in Korea would be growing and growing. So they wanted to get involved in all these things.

Goldstein:

Right.

Interpreter:

In 1980 Samsung acquired KTC, Korea Telecommunication Company, which had a very strong relationship with ITT. So, since Samsung acquired KTC, GTE decided to leave the Korean market because Samsung has a product based on ITT system rather than GTE.

Goldstein:

Now when Samsung acquired KTC it's because the government had privatized KTC, is that right? Right, in 1978?

Interpreter:

1980.

Goldstein:

1980 is when Samsung was acquired it. When was it turned into a private company?

Interpreter:

So it was privatized in 1980.

Goldstein:

Oh, the same year.

Interpreter:

Yes.

Goldstein:

Okay.

ITT and Western Electric systems

Interpreter:

ITT was not cooperative and it was unfriendly, so the government decided to have different product for the second generation. It chose Western Electric as a vendor of second generation products. That decision was made in 1979.

Goldstein:

So GTE really quit too early. GTE should have stayed.

Interpreter:

Even GTE applied for that business but 1979 Western Electric was chosen as a vendor. Gold Star was working with Western Electric, so Gold Star seemed to have the advantage, but the result was different because Samsung's, [inaudible word] owned by Samsung [inaudible word] speed. The [inaudible word] was speedy, but the Western Electric in response and reaction was very slow. So KTC responded more effectively to the market needs, and it has a good market share.

Goldstein:

Well, now I'm not sure I understand. KTC was owned by Samsung.

Interpreter:

Right. And it is with ITT products.

Goldstein:

And it was using ITT products.

Interpreter:

Right.

Goldstein:

Now who got impatient with ITT?

Interpreter:

The government.

Goldstein:

But what was the government's role now? Because the government had given up its interest in KTC, right?

Interpreter:

It was established by the bank, the industry bank which also is owned by the government.

Goldstein:

When you say it, you mean KTC?

Interpreter:

Yes. The KTC's owner was a industry bank. Commerce and industry bank.

Goldstein:

Right. So you're saying that the government was impatient with ITT.

Interpreter:

Right.

Goldstein:

So they wanted KTC to use a different system.

Interpreter:

Right. So there are two systems?

Goldstein:

Yes.

Interpreter:

There are two systems: one based on ITT and one based on Western Electric. But after KTC was acquired by Samsung, the business effectiveness of KTC was better than the Gold Star-Western Electric partnership.

Goldstein:

Right.

Interpreter:

Even though ITT was not successful in satisfying the Korean government.

Goldstein:

Okay. Well so KTC, when you said Western Electric won the contract, the contract was offered by KTC or?

Interpreter:

It is KT, not KTC, Korea Telecom.

Goldstein:

Okay.

Interpreter:

ITT's model was M10-CM which wass space division multiplexing system. And Western Electric's model was number one ESS which uses time division multiplexing.

[End of tape 1, side a]

Goldstein:

There's pretty much a division in time division.

Interpreter:

Yes, space division and time division. ITT uses space division and Western Electric is number one, goes into ITT [inaudible phrase]. They are similar, equivalent models. And then their models became the time division multiplexing models.

Goldstein:

Right. Western Electric number one ESS systems used time division.

Interpreter:

So ITT-1240, 1-2-4-0. ITT's 1240 model.

Goldstein:

It also was time division.

Interpreter:

Right. After that the Korean industries and government lab institute started, ETRI, Electric and Telecommunications Research Institute, this government institute. Actually some telecommunications companies of Korea started development of TDX. TDX-1, time division exchanger. TDX-10 is a Korean developed exchanger. Before that that it was either the ITT system or the AT&T system.

Goldstein:

The Western Electric system. When you said that Western Electric beat ITT for the contract, what was the scale of the contract? Was this for new telecommunications systems for all of Korea, or was it just a few?

Interpreter:

[inaudible phrase] good Western Electric in [inaudible phrase]. The new version is alternative, so I don't think it is [inaudible word]. ITT was the only one. It's a single player, a single source. So the Korean government decided to have a second source, that was Western Electric. That doesn't mean Western Electric became the only one.

TDX development; ETRI

Goldstein:

I see. But eventually Korea developed TDX.

Interpreter:

Korean version. There was understanding Western Electric switches cannot go to outside country. Outside country are only for ITT.

Interpreter:

So Western Electric was not get used to our foreign operations, overseas operations. It was the same system actually.

Goldstein:

So when, after TDX was developed then did the Korean government use all three, or did they try to simply use TDX?

Interpreter:

At the beginning they were all combined, but naturally they withdrew their business in Korea. So now TDX-10 is the major one.

Goldstein:

That was developed by ETRI you said.

Interpreter:

Yes, ETRI and Korean companies.

Goldstein:

I see. That's including Samsung?

Interpreter:

Samsung, Gold Star, they worked together. It's like a consortium.

Goldstein:

I see.

Interpreter:

In 1981 our cumulative production of black and white televisions reached ten million sets. In 1981 $300 million for export and '83 $500 million.

Matsushita components and Samsung

Goldstein:

I want to go back and ask, well you said that only Matsushita would supply components to Samsung.

Interpreter:

Yes.

Goldstein: Why were they willing, when all the Japanese companies were not?

Interpreter:

The Matsushita organization is a fully divided business unit. Each of them are independent centers. There is also a components manufacturing division. The component manufacturing division should sell more than 50 percent of their production to outside companies. So they are selling their components to somebody else.

Goldstein:

They were looking for customers.

Interpreter:

Right. So the set manufacturing division didn't want the component manufacturing division to sell their components to Samsung. They should make their own profit.

Goldstein:

Right. So maybe the other Japanese companies weren't organized this way.

Interpreter:

A little bit separated.

Goldstein:

Okay.

Interpreter:

We purchased magnetrons for our first microwave oven from Matsushita. So the division manufacturing magnetrons was happy because the Samsung microwave oven business was very good.

Goldstein:

Right.

Microwave oven manufacturing and exports

Interpreter:

But on the other hand, at the same time the microwave oven manufacturing division was very unhappy.

Goldstein:

Okay.

Interpreter:

When Samsung exported a microwave oven the first time, there was the OEM supplier to J.C. Penney.

Goldstein:

The OEM, the original equipment manufacturing.

Interpreter:

Yes. The people at Samsung got an order from J.C. Penney. The only supplier was Matsushita. At the time the microwave oven was considered good for rich people, because it is expensive. But since Samsung supplied microwave ovens inexpensively, it became the goods for everybody.

Goldstein:

Okay.

Interpreter:

So Samsung's supply did not hurt, did not damage Matsushita's portion of the market, because the pipe got bigger.

Goldstein:

I see.

Interpreter:

So it made microwave ovens popular in American homes.

Goldstein:

Samsung opened up a new market for it.

Interpreter:

So in the European market it sells very well because of the cost price down, and it became for everybody.

Goldstein:

Well then who started to compete with Samsung for the low end market?

Interpreter:

I think it's Sharp Manufacturing in China or Malaysia or something like that.

Goldstein:

Okay.

Semiconductors, process technology

Interpreter:

Regarding semiconductors, Samsung invited Dr. Sasaki to Korea in 1981. We showed our manufacturing lines and factories to Dr. Sasaki.

Goldstein:

From Sharp.

Interpreter:

Yes. And asked him to give us a seminar on process technology. In 1981 and 1982, Samsung was producing the LCD driver chip. At that time, Sharp was producing a 4-bit micron chip. Both of them used the same process technology, CMOS. So Dr. Sasaki recommended Samsung people to get the process technology from Sharp. So Samsung had an agreement with Sharp to get the process technology, and it improved its yield.

Goldstein:

Okay.

Interpreter:

Yes. And also at the time Sharp was producing 16K SRAM, static RAM.

Goldstein:

Static RAM.

Interpreter:

And Samsung was planning to develop 64K DRAM. Sharp did not manufacture DRAM. But 16K SRAM and 64K DRAM uses the same technology, same process technology. But the design is different. So Samsung acquired a design from Micro technology and acquired process technology from Sharp. So this was the starting of Samsung's memory business.

Goldstein:

To step back a minute, I was wondering why Samsung got interested in Korea Semiconductor in the first place, back in 1974. Why did Samsung move in that direction?

Interpreter:

ICII. Mr. [inaudible].

Goldstein:

Let me see if I have that name, Sudduth, right?

Interpreter:

I think that Mr. Kung mentioned him when he talked about Samsung semiconductors.

Goldstein:

Well, he said that, this was a few months ago, he said that he started a semiconductor manufacturing company, and the financing, he lost the financing. He wasn't able to sustain the company. So he came to, he looked for a partner and he approached Samsung, who agreed to buy him out. And then that was the story.

Interpreter:

Since the Samsung Electronics was producing the electronic equipment for which definitely they used semiconductors. Semiconductors in electronic products is like a engine in automobile. So without semiconductor business we are doing automobile business without any business. That was a conception of Kung. It was very hard to get into.

Goldstein:

Because they don't have the equipment and the expertise?

Interpreter:

Yes. So at that time Mr. Sudduth proposed to sell his equity in Korea Electronics, Korea Semiconductor. So he proposed his 50 percent equity to Samsung. So Samsung's chairman, Lee and vice chairman Lee at the time, and Mr. Kung discussed it and decided to acquire that equity and get into the semiconductor business.

Goldstein:

And that was the only semiconductor business in Korea at the time.

Interpreter:

But it was a big investment at the time. Five hundred thousand dollars today is not so big, but at the time it was a very big investment. And then in addition to that the Korea Semiconductor was recording losses, not profits.

Goldstein:

Did Samsung expect to manufacture semiconductors for resale or just for their own use?

Interpreter:

For transistors, they are for general use, but for LSI the primary application is DNS.

Goldstein:

DNS, yes.

Interpreter:

[inaudible word] module. To grow further we should say outside [inaudible word] too.

Interpreter:

I think he's finished with this history review. So anything you want to know more about the history or behind the story then he can answer the questions. He is Dr. Sasaki.

Goldstein:

That's Dr. Sasaki [apparently having been shown a photograph] Okay.

Korean electronics market; Samsung business plans

Interpreter:

In one or two days it is very difficult to you to understand the Korean situation in the industry. Maybe you need a month.

Goldstein:

Well, what makes it hard to understand? What is complicated about it? Are there many different forces that affect the success of the companies?

Interpreter:

You mean the major factors of success of Samsung Electronics?

Goldstein:

Well, Mr. Han just said that it's very hard to understand the Korean electrical market.

Interpreter:

The reason why he said it must be difficult to understand Korean electronic market is there are several major factors that made the Korean electronics market successful. For instance, government effort, the effort initiated by government and the effort initiated by industries and some great entrepreneurs and the cooperation between industries like Electronic Industries Association of Korea which is the association among electronic companies in Korea. It's like EIA in America. So if you want to know all the detailed things then you had better visit. You should visit EIAK. They have lots of information and data regarding not just Samsung but also all the Korean companies and government's activities. The former chairman Lee spent a lot of time in Tokyo to meet the people to get the advice and to get the information and integrate them to make a business plan. So when he returns from Tokyo he has clear and concrete business plans many times. That's why Samsung could succeed more than, better than, other companies like Gold Star.

Goldstein:

And those business plans, would they involve cooperation with other companies or did they have more to do with the products that...?

Interpreter:

Many categories of corporations. The planning was just a business plan and how to cooperate or how to compete against. In 1983 when chairman Lee made a decision to invest a lot of money into memory business, almost everybody dissuaded him not to do this, because if it fails it will make Samsung Electronics bankrupt. Then if through bankruptcy Samsung Electronics were closed, the whole collapse of Samsung Group, and then may be either hard [inaudible phrase] Korean economy. So almost everybody said no, please don't. But he made the lonely decision after several sleepless nights.

Goldstein:

Because he believed that there is a great future in this business.

Interpreter:

But ironically he couldn't see any success in semiconductor business when he passed away in 1987. The first year of profit in the semiconductor business was 1988. There are a few people who recommended that Mr. Lee to invest money into the semiconductor business. One of them was Dr. Sasaki.

Goldstein:

When Samsung plans their business, do they have in mind the need of Korea's development and modernization, or are they thinking more of global markets and the needs of other countries?

Interpreter:

Both.

Goldstein:

It depends on the product?

Interpreter:

Yes. Samsung Electronics products were selling overseas and domestic at the same time. So we should consider overseas market and domestic market at the same time. If the needs are different then we should develop different models.

Goldstein:

Because the markets are different, the overseas countries are more developed. Korea is still developing, so a single product fits into those locations differently.

Interpreter:

So there are many modifications, small modifications or big modification based on from one base model. It will be developed one base model, then we develop many different models.

Role of Samsung in Korean economy

Goldstein:

I'm interested in what you were saying before when you said that Korea's economy depends on the success of Samsung. So that's a great responsibility for Samsung. What things do they have to do to meet that responsibility?

[End of tape 1, side b]

Interpreter:

Samsung's export is about 10 percent of Korea's national export, so this year's trade deficit became larger than expected because of price cuts of semiconductors. So to meet the responsibility toward national economy, not just the electronic systems, but Samsung, the whole Samsung Group is practicing new management which aims to become the company contribute the society; not just Korean society, but also to the society Samsung is residing.

Goldstein:

In the 1950's in America, you know General Motors made all the cars. They use to say, "What's good for General Motors, is good for the United States." You've heard that. Is there the same feeling about Samsung in Korea, or maybe other companies?

Interpreter:

Maybe a little bit different from that, because the feeling of saying what is good for General Motors is good for United States is General Motors comes first, and General Motors dominates the United States.

Goldstein:

And that upset quite a few people.

Interpreter:

What we are aiming is not that kind of feeling. What we are aiming is, we can contribute to society to produce the better product with a better price. Satisfying our customer is our role to contribute to the society. And that's our mission and vision.

Goldstein:

So if Samsung doesn't believe, like General Motors did, that they ought to influence the shape of the society, then does that mean that here in Korea there is a different vision of a company's role?

Interpreter:

I don't know whether there is another company which has a similar aim of GM or similar aim of Samsung, because nowadays at least Korean companies are saying that they are to contribute to the society. But I don't know how detailed they are in exercising what they are saying. So it's very difficult to determine what their aim is just by seeing the advertisement.

Senior advisor position; Samsung executives and managers

Goldstein:

Well, what is your position in Samsung right now?

Interpreter:

Han's position [inaudible phrase] for vice chairman Mr. Kim whose business area is Japan. He's a senior advisor to CEO regarding business in Japan.

Goldstein:

And your background was technical.

Interpreter:

Yes.

Goldstein:

Yes, and so was chairman Kung's. Is that common in Samsung? Do the top executives have an engineering background?

Interpreter:

Yes. Mr. Kim also has an engineering background, vice chairman, and Mr. Yun the president of Samsung Japan headquarters he also has an engineering background. And the president of Samsung Electromechanics, has an engineering background.

Goldstein:

Is that common here in Korea for engineers as they succeed to shift into management?

Interpreter:

Yes. For electronics companies it is common to change the career from engineering to management. Even Samsung Electronics had a similar president, some of them from engineering background, some of them from business management background. But the people who shared longer time in top management positions were mostly from engineering backgrounds. What Mr. Han is saying is if there was not Mr. Kung in Samsung, it is hardly possible to achieve the success of today. That's why Mr. Kung was named the first person in our Hall of Fame, Samsung Group's Hall of Fame. And actually he is the only one, as of today.

Goldstein:

Now, was his contribution his strategy for the company?

Interpreter:

Strategy, development and management.

Goldstein:

So what are the key points of the strategy? Is there a way to describe it overall?

Interpreter:

The strategy and principle at the beginning was challenge  and expansion. To opt for the cost of challenge, we should have expanded our volumes and we should have devoted ourselves to development. At the beginning everything was new to us, so we had no experience and no knowledge of it. Without challenge there was nothing.

Goldstein:

Do you think we should wrap this up?

Interpreter:

Yes.

Goldstein:

I don't think there's anything more, so I just want to thank you for your time, and call it a day.

[End of interview]