If ever there was a serious contender for the title “iPhone killer”, the Samsung Galaxy S III is the closest thing I’ve seen. It’s time to take a closer look at its maker.
Samsung already sells considerably more handsets than Apple, but they don’t get anything like the amount of attention that Apple does, at least in English-speaking media. It’s not surprising: Most of their sales are made outside the USA, their stock isn’t listed on the NYSE and their product launches are in the Korean language (and in Seoul).
Korea is a pretty big player. The population of North and South combined is nearing that of Japan. Samsung looms large in South Korea’s national identity. It generates nearly 20% of the country’s GDP, a proportion that hasn’t changed much in years (AMRC, p. 48). The company’s economic output of $250 billion is larger than most national economies. At the World Expo, currently underway in Korea’s port city of Yeosu, Samsung has its own pavilion.
Like other trans-national corporations, Samsung outsources production around the world, often to places where manufacturing has lower wage cost.
The rise of Samsung and its operations throughout Asia are the subject of the first half of the book Labour in Globalising Asian Corporations published by Asia Monitor Resource Center (the second half deals mostly with Toyota).
The chapters are written by different authors and are a little episodic so, other than the general theme, the book doesn’t have an over-arching narrative. Each chapter is a meticulously pieced-together portrait of the company’s workforce, particularly Chapter 1 which makes a sweeping tour through Korea’s economic history right back to the Japanese occupation in the 1930s, the time of Samsung’s formation. It that respect it is an invaluable resource for students and others interested in alternative economics.
The book carefully documents the company’s shortcomings, mostly with respect to wages. In its home country Samsung uses a strategy of providing reasonable pay but banking on its prestige as an employer to squeeze the workforce to work harder and sacking the bottom 5-7% of performers every year as a matter of course.
The company has a declared ‘no union’ policy which it promotes by various means:
- Historically when workers in Korea itself start agitating for better pay, the company has given raises, neutering any union message.
- Outsourcing to suppliers that are separate companies on paper but actually controlled by Samsung management.
- In Korea and South-east Asia the company has succeeded in registering paper unions so that activists can’t obtain official recognition, and/or having real unions dissolved over minor administrative impediments.
- In Malaysia it also got the cooperation of the government to prevent unionization as part of the package of sweeteners to bring investment. This sounds outrageous but is possible because Malaysia has not ratified the ILO Convention on freedom of association.
It’s strange that Korea’s corporations are so virulently anti-union when Japanese companies learned a long time ago to work with them.
Samsung, owned and operated from Korea, also presents a challenge unlike anything I’ve covered to date. Whilst it is a public company it is not like other global brands, in which the largest stockholders are pension funds and no single fund owns a substantial holding. Samsung is a chaebol, a colossal interlocking network of companies all controlled by Lee Kun-hee and his family. The national government has only taken timid steps to wind back the chaebol system, despite its weaknesses such as overproduction which became apparent during the 1997-1998 economic crisis.
With no unions, little regulation and not even a fig-leaf of shareholder accountability there aren’t a whole lot of options to counter the power of the Lee Family. Social movement activism seems to be on the rise though. Last month a large meeting of three dozen activist networks took place in Seoul, making ten years of the International Campaign for Responsible Technology and they had Samsung squarely in their sights, holding a large protest outside the company’s headquarters.
The focus of this protest is occupational deaths among Samsung employees resulting from leukemia. The company has taken no action to improve safety (oddly this issue is not covered in Labour in Globalising Asian Corporations, even though it was only published a couple of years ago).
Their campaign is making some headway: on June 21st the country’s National Human Rights Commission requested that the Ministry of Employment and Labor change the rules to make it easier to prove that workplace injury and disease is attributable to the employer.
Chaebols still have to negotiate just like anyone else when their workforce is organised (it’s getting to that point that is the problem in Samsung). Just over a week ago, truck drivers belonging to the Korean Transport Workers Union achieved a 9.9% pay rise after a week-long strike. Samsung doesn’t have magic powers to prevent unionisation, just good lawyers.
Labour in Globalising Asian Corporations is available in hard copy from Asian Monitor Resource Center. It’s also available on their website in PDF. The sections relating to Samsung are:
- Chapters 1-2 (operations in Korea and China)
- Chapters 3-5 (operations in India, Thailand and Malaysia)
- Where the rubber hits the road: Union organising in EPZs 27 March 2012
- Tally of known occupational diseases and deaths in Samsung 28 April 2012
- Companies relocating to save on wages ruin it for everyone 6 June 2012