Lee Kun-hee, who transformed Samsung from a primarily local South Korean business into one of the world’s biggest technology groups, died on Sunday at the age of 78.
Lee had remained out of the public eye since suffering a heart attack in 2014, with his 52-year-old son Lee Jae-yong officially taking over management of the sprawling South Korean technology group.
But the elder Lee is credited with turning Samsung into a world leader in sectors ranging from technology and construction to shipping and mobile phones.
“Chairman Lee was a true visionary who transformed Samsung into the world-leading innovator and industrial powerhouse from a local business,” Samsung said on Sunday. “His legacy will be everlasting.”
Lee was known simply as “the chairman” among the company’s employees and rarely seen among its staff. But for 26 years, the publicity-shy South Korean held unchallenged authority over the group.
Lee’s vast wealth and connections to South Korean elite led some to deem him the country’s most powerful man, with more enduring influence than presidents. A string of lawsuits provoked concerns about how he wielded this power. He was convicted several times for crimes related to the succession process but was pardoned by a number of the country’s former presidents.
Yet even Lee’s critics tend to respect his achievements at Samsung, which pulled away from Hyundai to become the biggest of South Korea’s chaebol, or industrial groups, by a wide margin. The company is the largest maker of memory chips, smartphones and electronic displays, Samsung C&T built the world’s tallest building in Dubai and Samsung Heavy Industries is the world’s third-largest shipbuilder by sales. Other subsidiaries’ range from theme parks to howitzers.
It is for the transformation of Samsung Electronics, however, that Lee will be most remembered. Samsung was a minor player in the global technology industry when he took the helm in December 1987, succeeding Lee Byung-chull, his father and the group’s founder.
Lee’s university education in Japan and the US focused on economics and business, but he worked to master the science of semiconductors, giving him the confidence to authorise major investments in the field. Within five years, Samsung was the world’s biggest producer of memory chips underpinned by billions of dollars of annual investment, even during downturns.
Despite this success, shoppers around the world continued to view Samsung’s consumer electronics as poorly designed and undesirable. Lee’s aggressive interventions to change this perception have now become legend.
The most famous came in 1995, after the humiliation of finding that Samsung mobile phones he had given as gifts did not work. Two thousand Samsung employees at a phone manufacturing factory south of Seoul were instructed to don headbands marked “quality first” and gather outside. Thousands of phones and other electronic devices — with an estimated total value of $50m — were incinerated on a bonfire and the ashes were pulverised by a bulldozer.
Despite Lee’s admonitions to executives to “change everything but your wife and kids”, the results of the quality drive took years to materialise. But from early this century, Samsung began to win substantial global market share in consumer electronics with a more reliable and attractive range of products, backed by a huge increase in marketing expenditure. In 2006, it became the world’s biggest television producer by unit sales, having capitalised on the rise of flatscreen sets faster than rivals such as Sony.
Lee’s transformation of Samsung was also seen as instrumental in South Korea’s economic transformation in the 20th century. “He was the best business leader that had not only developed Samsung into a first-class global player but also placed South Korea among advanced economies,” said the Federation of Korean Industries, a lobby group for big businesses.
Lee’s project was badly disrupted by a scandal that began in 2007, after Samsung’s former general counsel alleged massive bribery and corruption at the company. Lee resigned from Samsung in 2008, before being convicted of tax evasion and breach of trust. But he was cleared of bribery and a presidential pardon opened the door for him to return in March 2010.
The saga added to controversy over Lee’s ability to exert control over all Samsung companies through a complex web of cross-shareholdings, despite the fact that his only formal position was chairman of Samsung Electronics. Even this was effectively an honorary title, never having been approved by shareholders. But current and former executives insist that this unorthodox governance system helped Samsung’s rapid rise.
On occasion, Lee would travel to the company’s headquarters early in the morning to deliver exhortations to executives. Normally, he preferred to work from his mansion in the upmarket district of Hannam, receiving visitors there or in a nearby building. One former executive remembers colleagues abstaining from drinking water in the morning before a marathon meeting with Lee, knowing that comfort breaks were out of the question.
Once Lee made a decision, Samsung moved with impressive speed. “It is an organisation full of people who are ready to rush towards the front line and sacrifice themselves at an order of a commanding officer,” a Sony executive admiringly told a Korean writer, as Samsung roared past the once-dominant Japanese company. “Chairman Kun-hee Lee is the commander-in-chief.”
That fleet-footedness was seen most clearly as Samsung recovered from an initial failure to spot the potential of smartphones. Less than two years after being written off as an also-ran, Samsung overtook Apple in 2011 to become the global leader by unit sales.
Lee was born on January 9 1942. His success in business contrasted with his poor health for the last decade of his life and he was dogged by family trauma, worst of all being the suicide of his youngest daughter in New York in 2005. Lee’s relationship with his two older brothers disintegrated after he was preferred to them for the Samsung chairmanship, and they sued him for part of his inheritance in an unsuccessful lawsuit.
Lee’s work to transfer control to the next generation has also caused legal problems. His efforts to ensure the transfer of assets to his son Jae-yong were a key factor behind the 2007-09 corruption scandal. But the latter nonetheless took over leadership, although he has been engulfed in protracted legal wrangling over alleged wrongdoing in the succession process. The younger Lee has denied any wrongdoing, saying it was a “normal” succession process.
Most analysts say he will find it almost impossible to oversee growth matching that of the past two decades. That is a tribute, of sorts, to his father’s record.