High-Tech Giant Gears for Future the President of Samsung Electronics Company Talks about Tough Competition Ahead for Companies in Asian Countries and South Korea's Challenge in Moving from a Low-Wage Labor Force to One with High-Wage, High-Skill Jobs

By Jae-Bok Young, writer of The Christian Science Monitor | The Christian Science Monitor, October 15, 1992 | Go to article overview

High-Tech Giant Gears for Future the President of Samsung Electronics Company Talks about Tough Competition Ahead for Companies in Asian Countries and South Korea's Challenge in Moving from a Low-Wage Labor Force to One with High-Wage, High-Skill Jobs


Jae-Bok Young, writer of The Christian Science Monitor, The Christian Science Monitor


SOUTH Korean business leaders are spending sleepless nights trying to escape a dilemma: How can they compete with third-world countries that produce goods less expensively, and at the same time try to catch up with Japanese firms that have an edge in high technology.

Korean firms have neither the low wages that the country once enjoyed nor the advanced technology needed to compete with the Japanese.

"My company is sandwiched between Southeast Asian nations and Japan," says Jong Yong Yun, president of Samsung Electronics Company, the world's fifth-largest electonics firm. The company is a division of the $43 billion Korea-based conglomerate, The Samsung Group, the world's 18th-largest company.

In an interview with the Monitor at his office in Suwon City, Mr. Yun, known as a driving force in Korea's electronics industry, reveals some of Samsung's long-term strategies.

When asked whether Samsung gets technological assistance from Japan, he responds that "technology is a new currency.... These days the Japanese won't share any new technology with us. We have to develop our own." Spending on research

Developing new technology does not come easily, however. Since 1988, the firm has increased its research-and-development budget threefold. Last year, it spent about $600 million on R&D. "We have not reaped the fruit of our investment yet," he says.

Within the next two to three years, however, he says that Samsung will make progress against the Japanese in terms of quality and prices. Currently Korean electronics products are selling 5 to 10 percent below the prices of comparable Japanese goods, he notes.

"Producing high-value products with the next generation consumer electronics and improving product images among consumers are our main goals," he says. Super-videocassette recorders, high-definition television, and advanced memory chips will be the growth products for Samsung in the near future, Yun says.

One major obstacle the firm faces is the difficulty of obtaining the necessary capital to finance R&D projects, due to the tight credit market in Korea, he says. Companies pay at least 18 to 20 percent interest for short-term loans from Korean banks.

Samsung employs more than 200 Korean researchers who earned PhDs in the US. This large pool of talent is the force behind Samsung's development of advanced microchips such as 64-megabit DRAM chip (dynamic random-access memory), standard components of computers and consumer electronics goods.

Yun attributes the development of new generations of memory chips to the country's economic growth. "When our GNP level was below $2,000 {per capita}, it was unthinkable for us to develop memory-chip technology. But when the level hit above $4,000, we were able to attract many excellent Korean researchers from overseas."

When the company wanted to hire an experienced Korean researcher from Bell Laboratories quite a long time ago, it had to pay him a $100,000 salary along with a senior title and free housing. …

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