Who owns Samsung? A brief history of the South Korean giant

Once you hear the phrase Samsung, your thoughts in all probability jumps to smartphones and residential home equipment. However most don’t know that the corporate’s affect extends far past digital gadgets. In its house nation of South Korea, the Samsung Group operates every part from motels to hospitals and even runs the nation’s largest life insurance coverage agency. With so many companies and subsidiaries, chances are you’ll be questioning — how does the Samsung Group handle day-to-day operations and who owns all of it?

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Samsung is a big family-owned firm, which is often known as a chaebol in South Korea. Different examples of chaebols embody Hyundai and LG. As we speak, Samsung is led by Lee Jae-yong, a direct descendant of the corporate’s founder. With an estimated internet value of $9.2 billion, he’s the second richest particular person in South Korea.

Lee Jae-yong (often known as Jay Y. Lee) stepped up as Samsung’s govt chairman in October 2022. Previous to that, his father Lee Kun-hee headed Samsung for over three a long time and formed the corporate into the electronics large we all know right this moment.

The idea of chaebols first emerged within the Nineteen Sixties after the Korean Struggle because the nation’s authorities entrusted choose firms with constructing export manufacturing. This gave rise to a sort of symbiotic relationship between chaebols and the South Korean authorities that exists to today. The affect of chaebols within the nation has led to some controversy, however extra on that later.

Samsung has been round since earlier than the primary laptop even existed. Lee Byung-Chull based Samsung in 1938, specializing in buying and selling dried fish, noodles, and different home produce. Within the a long time since, the corporate has diversified into insurance coverage, client finance, electronics, hospitality, development, and a lot of different industries via a collection of acquisitions and investments.

As we speak, the Samsung Group accounts for 20% of South Korea’s Gross Home Product (GDP). That’s one of many largest single contributions by any firm on the planet.

Is Samsung a publicly traded firm?

In complete, the Samsung Group controls round 80 subsidiaries. That is largely a results of the Lee household arising with inventive methods to retain as a lot management over the corporate as doable. You see, solely 19 of Samsung’s subsidiaries are publicly traded on the Korean inventory market. The Lee household owns sufficient shares in every subsidiary, each instantly and not directly, to steer all the firm.

For instance, Samsung Electronics is partially owned by two different subsidiaries: Samsung Life Insurance coverage and Samsung C&T. On paper, Samsung’s chairman Lee Jae-yong has a a lot smaller particular person stake than both of these subsidiaries. Nonetheless, Lee additionally holds a big stake within the subsidiaries, so his management over Samsung Electronics not directly will increase. This sort of cross-ownership is widespread throughout South Korean chaebols.

Apart from the Lee household, the South Korean Nationwide Pension Service additionally holds a large 8.6% stake in Samsung Electronics. And given the shut relationship between chaebols and the federal government, it ought to come as no shock that the Lee household often faces little to no opposition to shareholder proposals.

Massive institutional traders, each Korean and worldwide, additionally maintain sizable stakes in Samsung and its subsidiaries. New York-based fund administration firm BlackRock, as an example, holds the third-largest chunk of Samsung Electronics with its 5% stake.

See additionally: What’s the very best Android cellphone?

Now that we all know the reply to who owns Samsung, what about day-to-day decision-making? It’s difficult. Despite the fact that Samsung’s company construction retains the Lee household largely in management, it doesn’t at all times work of their favor.

In 2017, Lee Jae-yong was discovered responsible of bribery and corruption expenses after he donated tens of millions to sway key members of the federal government, together with the nation’s then-President Park Geun-hye. However whereas he was initially meant to serve 5 years in jail, Lee’s sentence was commuted solely a yr later. Notably, Lee Jae-yong hadn’t assumed the function of Samsung’s chairman but, though he made key selections.

The scandal re-emerged in 2020, when South Korea’s Supreme Courtroom reopened the case. Lee was then despatched again to jail to serve the rest of his sentence. Nonetheless, he was later launched on parole after which pardoned by the President in a bid to “overcome the financial disaster” and revitalize the South Korean financial system after COVID-19.

Lee Jae-yong was formally sworn in as Samsung’s chairman in October 2022. Previous to that, he served as the corporate’s de facto chief following his father’s coronary heart assault and subsequent coma in 2014.

As talked about above, a handful of Samsung Group’s subsidiaries are publicly traded firms. Which means that anybody should purchase their shares on the inventory market. Nonetheless, Samsung shares don’t commerce on American inventory exchanges just like the NYSE, making it barely more durable for the typical particular person to take a position.

To purchase Samsung shares, you’d need to open a South Korean brokerage account or discover a native financial institution that can course of the transaction. Bigger traders sometimes commerce over-the-counter with such monetary establishments. You’ll find extra particulars on Samsung’s investor relations web site.

In the event you merely need some publicity to Samsung in your portfolio, it’s also possible to put money into an exchange-traded fund (ETF) as an alternative of shopping for particular person shares. The iShares Asia 50 ETF (ticker AIA), for instance, has a ten% publicity to Samsung Electronics. The latter is chargeable for making many merchandise you’re accustomed to, from the Galaxy S22 collection to house home equipment.

As for whether or not the corporate will ever be privately owned once more, it’s unlikely given the sheer worth of its subsidiaries. With a market capitalization of over 300 billion, Samsung is likely one of the largest firms on the planet. For some context, Elon Musk needed to pay $45 billion to purchase Twitter and take it non-public. And even that required inventive accounting with financial institution loans, disposal of Tesla shares, and help from present massive shareholders.

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