Galaxy Note7 recall dismays South Korea, the ‘Republic of Samsung’

SEOUL — A former South Korean teacher, Mr Kim Jeong-min was at Narita Airport in Japan this month when he watched a television news report that Samsung Electronics’s Galaxy Note7 smartphone was banned on airplanes because it was prone to catching fire.

Mr Kim, 58, said he had felt humiliated, as if the non-Koreans in the airport lounge were looking at him.

Though he does not own a Galaxy Note7, his reaction was typical of the intense feelings South Koreans hold toward Samsung, the most dramatic corporate success story to emerge from the country’s transformation from a war-torn agrarian nation to a global economic powerhouse.

“Whether we like it or not, Samsung is to the global market what our national team is in the Olympics,” Mr Kim said.

Calling Samsung this country’s biggest and most profitable company hardly describes its special (but not always favourable) place in minds here. Some South Koreans say they live in the “Republic of Samsung”.

Life can literally begin and end with Samsung: One can be born in a Samsung hospital; attend a Samsung university; honeymoon in a Samsung hotel; stock a Samsung-built apartment with Samsung appliances bought with a Samsung credit card; take children to Samsung amusement parks; and have one’s body, upon death, taken to a Samsung funeral centre.

For South Koreans, the company’s progression from an assembler of clunky transistor radio sets to the world’s leading producer of flat-panel television sets, computer chips and smartphones is a source of national pride. Last year, Samsung accounted for 20 per cent of South Korea’s US$527 billion (S$735 billion) in exports. That pride was dented, and economic unease deepened, when Samsung recalled more than 3 million Note7 smartphones globally and decided not to produce any more because some devices heated up and burst into flames.

“This is not just Samsung’s trouble. It’s trouble for the entire economy,” the opposition leader Moon Jae-in, a potential contender in next year’s presidential election, said this month, referring to the Note7 crisis. “Because people take pride in Samsung as a brand representing South Korea, it is their trouble, too.”

On Thursday (Oct 20), President Park Geun-hye voiced concern about the Galaxy Note7 recall’s impact on exports. The economy has taken recent hits from rising unemployment rates and the bankruptcy of Hanjin, a major shipping company. Its shipyards, among the world’s largest, are laying off thousands after posting huge losses because of shrinking orders and competition from lower-cost rivals in China.

Samsung is the best-known brand name South Korea has ever produced, ranking seventh in the 100 best global brands compiled by Interbrand, a brand consultancy. Its Galaxy smartphones have lifted its * and by extension South Korea’s — high-tech image more than any other Korean product.

Having overtaken Sony and other Japanese companies it once mimicked, Samsung has grown powerful enough to challenge Apple, an icon of US innovation.

To many South Koreans, the Note7 recall, the biggest ever in the mobile phone industry, is just another painful lesson for Samsung to learn from and pay for * the recall is estimated to cost it US$6.2 billion — in its quest to dominate yet another industry.

“All manufacturing companies, including the American and Japanese, make mistakes,” said Ms Park Bo-yeon, 29, who was recently browsing in a handset shop in downtown Seoul where a notice urged customers to hand in Note7s. “What matters is whether you can learn from them and move on. Samsung always has.”

Park suspected that the Note7 fiasco had been overblown by the US news media, which she said looked down on Samsung. She said she was disappointed that Samsung had failed to explain why some Note7s heated up and caught fire. But she was equally impressed by Samsung’s “courageous decision to terminate the Note7 before anyone died”.

Among South Koreans, though, the name Samsung also evokes greed and secrecy. They often describe the company as a predator that makes profits not so much through innovation as by ruthlessly squeezing its numerous domestic parts suppliers.

And Samsung has never shaken off its image as an imitator, though a highly efficient one. (Last year, it was ordered to pay $548 million in damages to Apple for infringing on its iPhone design patents, a case that is now at the US Supreme Court.)

The Note7 disaster raised more doubt about Samsung’s reputation. It also reminded South Koreans that their export-driven economy depended so heavily on Samsung and a handful of other family-controlled conglomerates, or chaebol, that they often feel it is held hostage to them.

“The saying that Samsung’s good and bad luck is our country’s good and bad luck is propaganda manufactured by Samsung and media and politicians beholden to it,” said Mr Kim Sang-gyun, 32, who was visiting the same shop as Ms Park. “Why should I worry about Samsung’s trouble unless I owned a Samsung share or Note7? And I don’t.”

Samsung is the most successful among the chaebol, which spearheaded South Korea’s industrialization by copying foreign competitors’ products but making them cheaper, better and faster.

China is now using the same model to threaten South Korea in the industries it has dominated through the “fast follower” strategy: shipbuilding, semiconductor and smartphones. South Korea sees itself as in a constant race to catch up with innovators like Apple while struggling to keep a step ahead of Chinese rivals.

The Note7 humiliation left many South Koreans wondering whether Samsung, and South Korea in general, is stumbling in that race.

“They say Samsung is the strongest among our country’s businesses,” said Mr Kim Jeong-min, the former teacher. “That’s why its Note7 failure worries me. It kind of shows our limit.” THE NEW YORK TIMES