[Interview] American journalist seeks to pull back the curtain on “Samsung Empire”

Freelance reporter Geoffrey Cain, who authored a book on Samsung that is set to be published in February, speaks with a Hankyoreh reporter at an office in the Hannam neighborhood of Seoul on Nov. 21. “Patience was the “most important attribute for delving into Samsung,” he said. “None of the usual reporting techniques worked.” (by Kang Jae-hoon, staff photographer)

Geoffrey Cain’s book, which talks about the company’s growth and corporate culture, will be published in February

Back in 2009, when Geoffrey Cain first arrived in South Korea as the senior correspondent for GlobalPost, a US-based current affairs news website, he was planning to focus on the North Korean issue, like other foreign correspondents. But he changed his mind after a shocking visit to a Samsung workplace. “It was overflowing with banners praising Chairman Lee Kun-hee, and several senior executives were able to quote Lee’s speeches and sayings from memory. It almost made me think I was in North Korea,” Cain recalled.

Cain’s experience on the ground at South Korea’s best-known global corporation has kept his attention fixed on South Korean society and on the Samsung issue in particular. “At first, it was hard to understand how the Lee family were treated like royalty by the South Korean media and why young South Koreans were competing so fiercely to get a job at Samsung,” he said.

Since then, Cain has published numerous articles about Samsung both at GlobalPost and other media outlets, including Fast Company, an American business magazine. His reporting on the chaebol has put him in contact with over a thousand people, including scholars, employees at rival companies in South Korea and overseas, employees and executives at Samsung, and high-profile members of other chaebols linked to Samsung. In February of next year, Cain will be publishing a book spanning his research over this period, tentatively titled Samsung Empire.

Before coming to South Korea, Cain was based in Cambodia, where he covered Asia for the Economist and the Far Eastern Economic Review. A series of investigative reports on labor issues in Cambodia was selected in 2015 as a finalist for a journalism award by the Society of Publishers in Asia. In 2015, Cain visited North Korea to report on North Korean society under the rule of Kim Jong-un. After about six years in South Korea, Cain has returned to the US, where he is working as a freelance reporter. During a brief trip to South Korea, Cain sat down with the Hankyoreh on Nov. 21 to talk about Samsung.

Hankyoreh (Hani): Is there any particular reason you’re so interested in Samsung?

Geoffrey Cain (Cain): South Korea achieved miraculous economic growth through what are known as the chaebols, but they also conceal a lot of problems. Samsung is a great example of the interplay of light and darkness in the Korean economy. It had plenty of reporting value.

Hani: Did you actually meet members of the family that controls Samsung?

Cain: I wasn’t able to meet Chairman Lee Kun-hee or Vice Chairman Lee Jae-yong. However, I did meet some of the key figures at chaebols linked to Samsung such as CJ, Hansol and Shinsegae. I tried my best not to contact them too frequently. I figured they weren’t likely to tell me anything approximating the truth.

Young “Samsung men” view their employer with a proud yet critical eye

Hani: What was it like meeting them in person? Were there any memorable episodes?

Cain: It was striking to see them refer to themselves as the “royal family.” They often expressed pride at having deigned to play an important role in helping South Korea become an advanced economy. To understand Samsung, you have to study the kings of the Joseon dynasty, the zaibatsu dynasties of Japan, and even North Korea’s Kim dynasty. All their stories are fundamentally not that different from Samsung.

Hani: I’m curious why you’re so critical of Samsung that you would compare it to North Korean society.

Cain: I’m not being critical—I’m just saying they represent the same period of time. When Samsung started to grow in the 1960s and 1970s, South Korean society was similar in some ways to North Korea at the time. But with politics dominated by the military dictatorship of Park Chung-hee, a unique corporate culture formed in South Korea. A management style where everyone acts in line with orders from a single boss began to bleed over into companies as well. This militaristic approach remains in place at South Korea’s other chaebols, such as Hyundai, LG and Lotte.

Cain went on to say that he is particularly impressed by the young “Samsung men,” a term encompassing both new recruits and middle managers at the group. He was once having a meal with Samsung employees when they told him about an athletic event the company used to host called the “Samsung Summer Festival,” which reminded them of North Korea’s mass games. “I remember I felt the same way about that,” Cain said. Given that, he still has trouble understanding how these employees remain so loyal to the company.

Hani: What did you usually talk about when you met “Samsung men”?

Cain: They had a mixture of pride about getting a job at Samsung and a critical stance on unacceptable behavior. It was a love-hate relationship with the company. They tended to respect Samsung for its team spirit, but disagree with the imperial management style by Chairman Lee and his family.

Hani: You used the word “empire” in the title of the book.

Cain: I wouldn’t have used that word if I had written a book about a company like Apple, Facebook or Uber. Those are typical companies that develop and manufacture products and promote and sell them to consumers. But Samsung has a narrative straight out of a thriller: dynastic management, a struggle for the throne and internal discord. If the internecine conflict in the popular American drama Game of Thrones actually existed, it probably wouldn’t be hard to find it in South Korea’s chaebols.

Hani: Don’t some people think that’s an effective way to run a company?

Cain: The loyalty of the "Samsung Man" was important in the 1980s. I will never forget the story I heard from a Samsung semiconductor engineer. In 1983, Samsung held a 64-kilometer march in the mountains all night long. The reason? To show their dedication to the cause of creating Samsung's first semiconductor, the 64K DRAM, to "suffer so we can succeed," he told me. This would be unthinkable in the US. It's this spirit that allowed Korea to overcome all odds and rise as a serious power. But this "chaebol culture" has its downsides.

Hani: What kind of downsides do you mean?

Cain: I saw a strange dichotomy. Samsung is a global leader in technology, but has also managed to preserve the old system of dynastic rule. Samsung wishes for everyone to see it as an excellent, sophisticated technology company. Isn’t that a contradiction? The nearly feudal loyalty of the “Samsung man” can only take it so far. There are also issues with how they deal with workers’ rights.

Members of the civic group Bannolim hold a sit-in outside the Samsung headquarters in the Seocho district of Seoul on Nov. 26 to demand that Samsung take steps to protect the health and rights of workers in the company’s semiconductor division. The sit-in has been going on for 782 consecutive days. (by Kim Seong-gwang, staff photographer)

It was at this point that Cain referred to the late Hwang Yu-mi, noting that Samsung’s growth had been fueled by the sacrifices of workers and small suppliers that do business with Samsung at the cost of being squeezed to the last drop. Hwang, who worked at a semiconductor factory for Samsung Electronics, died of leukemia in 2007.

On Nov. 20 of that year, the Joint Action Committee for Learning the Facts about the Outbreak of Leukemia at Samsung Semiconductors and for Securing the Basic Rights of Labor was established. In addition, Banollim, a watchdog group defending the health and human rights of workers in the semiconductor industry, was launched the following February. This past August, South Korea’s Supreme Court ruled for the first time that incidences of multiple sclerosis and brain tumors among workers at Samsung Electronics count as occupational diseases.

“None of the usual reporting techniques worked”

Hani: What difficulties did you experience while reporting on Samsung?

Cain: In all honesty, I’ve found myself thinking on several occasions that it would be easier to report on North Korea. Samsung’s reaction to my reporting has been extreme. Whenever I’m about to make a comment about Samsung to the foreign press—on CNN, BBC, Bloomberg or what have you—Samsung immediately questions my credibility. I believe they’ve made an effort to undermine my reputation as a journalist.

“Despite repeated promises that I would guarantee their anonymity, most Samsung employees were too terrified of the company to even pick up the phone when I called,” Cain said. After pausing to catch his breath, he went on to say that patience was the “most important attribute for delving into Samsung,” since “none of the usual reporting techniques worked.”

Hani: Quite a few books have been written about Samsung in South Korea. Have you read them?

Cain: I’ve read most of the books on the subject, from Lee Byung-chul’s autobiography to stuff in English. The most memorable of those was the book by Kim Yong-chul, the lawyer who was an insider at Samsung and then blew the whistle on corruption at the company after leaving.

Hani: In your reporting, have you come across anything that corresponds with what Kim wrote about in Think Samsung?

Cain: I think a substantial part of the book is credible. In fact, there are legal documents showing that Samsung has engaged in illegal behavior, such as destroying evidence. There was even a department at Samsung that was set up to facilitate the destruction of evidence in preparation for a raid by the Fair Trade Commission.

Hani: Do you think Samsung’s success is a general characteristic of the South Korean economy?

Cain: It’s more accurate to regard it as a product of its time than as having been brought about by the leadership of a single individual. The current ‘Samsung legend’ and the chaebol culture were created by a national determination to beat Japan and the desperate sense that they should at least grow faster than North Korea. That’s why Samsung shouldn’t attribute its success to the “glory of the family.”

Hani: Do you think there are any positive aspects of the South Korean chaebol system?

Cain: Of course there are. Despite his scandals, Chairman Lee Kun-hee deserves a lot of credit for Samsung’s success. Samsung today has fought and defeated Sony, and come very close to defeating Apple. I believe that Samsung's militaristic approach has been at least partially successful in achieving growth. As I’ve said before, the problem is that Samsung is trying to make him into a legend, not a leader.

Hani: What message do you want to communicate through your book?

Cain: Most of the books about Samsung that have been published in South Korea are academic analyses of its growth. I wanted to give Korean readers some relevant information about how Samsung was able to succeed in such a short time overseas while also throwing in little-known anecdotes about the chaebol. And I wanted to give overseas readers an overview of the chaebol culture that Koreans already know about, including the battle over the succession at Samsung. I’ve tried to remain objective overall. And I also hope to throw in a few juicy stories about Lee Jae-yong—though that’s still up in the air, pending legal review.

Hani: I’m told you’re only planning to publish the book in the US.

Cain: I approached 14 South Korean publishers, but they all turned me down. Only one of them was even interested, and that fell through after Lee Jae-yong was implicated in the Choi Sun-sil scandal.

Moon administration to be factor in chaebol reform and at Samsung

Hani: It’s been 20 years now since South Korea underwent the Asian financial crisis. As a reporter who has mostly been interested in economic issues, how would you compare the South Korean economy before and after the crisis?

Cain: Whereas South Korean economic growth was concentrated in the manufacturing industry prior to 1997, since the crisis it has jumped into creative industries such as software, online services and mobile phones. But a considerable number of companies cling to a militaristic corporate culture that derives from the manufacturing sector. Even Samsung has tried to add a little more independence to corporate culture by adopting a startup mentality, but its basic cultural framework is still old-fashioned. I don’t think any major changes are likely to happen for the time being. I suppose the Moon administration might be a factor, though.

Hani: What do you think about President Moon’s economic policy?

Cain: The push to reform the chaebols was actually around under President Park Geun-hye, too. Considering that we didn’t see any real change back then, I think we’ll have to keep watching for a while. That said, I was impressed with President Moon’s appointment of Kim Sang-jo—who is called the “chaebol sniper”—as chair of the Fair Trade Commission. That’s a different direction from the previous administration, so I’m somewhat hopeful.

Hani: Do you have any advice you’d like to give Samsung?

Cain: They need to get away from the “family management” approach. This could be tolerated to a certain extent when power was transferred from the founder to the second generation, given the close ties between the business world and the government back then. But it’s a problem that control of the company is still being handed down to the next generation and that the chairman is still being mythologized. Lee Jae-yong is said to be smart and well-connected, but when it comes down to it we have no examples of him succeeding at Samsung. They need to let professional managers take over the company. If President Moon’s chaebol reform succeeds, there will probably be some genuine change, even at Samsung.

At the close of the interview, Cain described South Korea as “the country that achieved the candlelight revolution.” He also predicted that “it’s only a matter of time until Samsung’s workers will finally get their democratic rights, as in the case of Hwang Yu-mi (an employee in the company’s semiconductor division who died of leukemia).” He had one final request for the chaebol: “Before Samsung is put on trial by the Korean people, I hope it will change on its own and create a real ‘legend.’”

By Kim Pognee, staff reporter

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