South Korea’s Love Affair with Samsung

Moon Yoon-jung is damn proud of Samsung.

“Especially when I’m traveling abroad and I see Samsung on a billboard, I feel pride. I can’t help it,” she says.

The 28 year-old is studying at a cram school in Gangnam for corporate aptitude tests. She passed the bar and wants to be a lawyer for a top 20 corporation. She bashfully covers her mouth as she speaks to hide giggles while she “remembers the sense of pride” she has felt for Korea’s most powerful company.

Moon knows that Lee Jae-yong, the vice chairman and de facto head of Samsung Group, is under investigation for corruption allegations. This week, a judge ruled against an arrest warrant for Lee. Special prosecutors wanted to detain him while they gather evidence to try and prove he bribed the government to smooth an affiliate merger and firm up his family’s grip on the Samsung empire.

Moon is one of many Koreans who compartmentalize their feelings of patriotism and frustration for chaebol, South Korea’s massive, family-run corporations.

Her pride, she says, is about what Samsung symbolizes: a Korean success story. She feels patriotic when she sees Samsung products overseas, just the way she feels patriotic when she hears Psy’s song “Gangnam Style” in a foreign country.

“There’s this joy and this pride that this belongs to us. It’s a Korean thing. The pride toward Samsung is less a matter of values or perceptions about the conglomerate,” said Moon.

Myungji Yang, a professor of political science at the University of Hawaii, Manoa, said she believes Koreans feel very “ambivalent” toward chaebol.

On one hand, she said, the public knows the chaebol system is monopolistic and has grown with governmental support under authoritarian regimes at the expense of small- and medium-sized businesses and self-employed people.

Yang said there are also concerns the companies are too big to fail, and if a company like Samsung went bankrupt, it would severely damage the economy.

The chaebol can take much credit for the “Korean Miracle,” South Korea’s incredible economic development in the decades following the Korean War. But now more than ever, they’re under fire for allegations of unfair business practices and exchanging donations for favors from the government.

Just last month, lawmakers questioned the heads of nine of South Korea’s biggest corporations over alleged ties to the political scandal that led to President Park Geun-hye’s impeachment.

Under the leadership of Samsung Electronics Chairman Lee Kun-hee and now his son, Jae-yong, the corporation has become known worldwide both for premium consumer electronics and governance that is allegedly corrupt, opaque, and shareholder unfriendly. Corruption charges are nothing new to Samsung. Lee Kun-hee received a presidential pardon in 2009 for his criminal convictions.

Some critics of chaebol say patriotism has long insulated the powerful corporations.

In 2015, Samsung C&T shareholder Elliott Management, a New York-based hedge fund, voted against the merger of C&T with another Samsung affiliate. The deal, Elliot claimed, boosted the Lee family’s control of Samsung Electronics while disregarding the interests of minority shareholders. The hedge fund lost.

"Domestic and international advisory boards with significant voting rights opposed the merger, advising it was against the national interest. But the National Pension Service still stood by Samsung's side,” said Park Yong-chae last fall in an editorial for the Kyunghyang Daily. Park is the paper’s economy editor.

“The government, politicians, media -- nobody problematized this decision, and they volunteered to act as Samsung's protective bubble. Patriotism lay at the foundation, that Samsung should not be shaken because of a hedge fund looking for short-term profit."

Shortly after the merger, the left-leaning daily Hankyoreh published an article that described Samsung’s efforts to woo shareholders in favor of the deal as “patriotic marketing.”

More recently, conservative media have spoken up in defense of the younger Lee and Samsung in clear terms.

In an editorial, Mediapen CEO Lee Ui-chun writes:

"Samsung was able to reach the top of the world, thanks to the blood and sweat of its founder Lee Byung-chul, CEO Lee Kun-hee, vice chairman Lee Jae-yong and other members of the owner family, as well as countless directors. The government, financial organs and the Korean people also worked together.”

Lee adds:

“If one is a South Korean, he or she has the responsibility to support and cheer on the global leader Samsung, so it improves even more. Samsung represents South Korea's level of trust abroad. It is necessary for special prosecutors to find the truth [about the allegations]. But the economy cannot be burned up by the candles [a reference to the candlelight vigils against the government of President Park]."

But there doesn’t appear to be a clear left-right dividing line when it comes to patriotism and the media.

In 2012, not long after Apple had won a case in the first of a series of ongoing patent lawsuits against Samsung, Korean research university KAIST published a study breaking down bias among Korean media. The study showed 92.9 percent of broadcasts and 78.1 percent of articles portrayed Samsung more favorably. According to the research team, “the Samsung-bias was overwhelming in local journalism."

However, Park Sang-in, a professor of economics at Seoul National University, said he doesn’t believe patriotism for chaebol is much of an issue anymore. Park said if anything, the media exaggerates that sentiment, whereas “ordinary people, especially young people” do not live by that kind of patriotism anymore.

“Media in Korea are under heavy influence from Samsung, because of advertising. No newspaper in Korea can survive without receiving advertising from Samsung,” said Park.

“You may end up with quite a different picture [of society] by following someone on social media, compared to what you see in the mainstream media.”

Park said the Korean people are proud of what Samsung has accomplished. He’s proud, too. But such sentiments have their limits: “In the past, patriotism had very deep roots in Korea, and people paid a premium for domestic products because of patriotism. Now, that’s not the case.”

He added the people will no longer “blindly” support Samsung.