In the Belly of the Beast: Samsung Electronics’ Supply Chain and Workforce in South Korea
This paper discusses Samsung Electronics’ importance to the South Korea economy, its ownership structureand its system of supply and production. It centres on an in
depth analysis of the organization of Samsung Electronics’ supply chain, assessing the electronics giant’s specic relationship to the companies that composeeach layer of this complex system. It focuses on the domestic South Korean supply chain, but makes refer-ences to overseas production sites and suppliers. Through this analysis, the report demonstrates Samsung Electronics’ almost absolute dominance of the South Korean electronics industry and the meaning of thisdominance for less inuential companies and their workers. The paper also discusses the no union policy of Samsung Electronics and its parent company, Samsung Group and the way this policy combines with the or- ganization of the supply chain to enable production exibility and maximum prots for Samsung, while keep-ing downward pressure on wages at most points in the supply chain. Finally, the report assesses various cur-rent eorts to organize Samsung workers, and argues that the time is now ripe to carry out a full
blown cam-paign for their health and labour rights.
In the Belly of the Beast: Samsung Electronics’ Supply Chain and Workforcein South Korea
Jiwon Han, Wol
san Liem, and Yoomi Lee
Research Institute for Alternative Workers Movements
I. Samsung Electronics: An Introduction
Samsung Electronics. Consumers know it well,yearning to purchase its products, which theyexperience as a single brand. In fact, SamsungElectronics is not that simple and it is incorrect tosee it as a single company/brand.Samsung Electronics is the agship company ofSamsung Group, which is composed of 516 com-panies worldwide. Of these companies 195 are full
edged Samsung Electronics subsidiaries, mean-ing they are incorporated entities of which Sam-sung Electronics owns more than a 50 percentshare. In addition, Samsung Electronics controls afurther 63 companies which make componentsfor the subsidiaries, although it does not own amajority share in them. The mobile phones, televi-sions and all 264 products under the SamsungElectronics brand are produced and sold throughSamsung Group’s network.
The ownership structure of these 500 plus compa-nies is formed through a complex web of circular investments. This structure, which makes it possi-ble for an investor to control an entire companywithout directly owning as much as a 10 percentshare, characterizes Korean
(conglomerates), including Samsung. The group isin fact a representative case, in which the owner is able to control the entire group, despite nothaving only a majority share in many of the com-panies.Lee Kun
hee, chairman of Samsung Group, and hisfamily own only a 2 percent share in SamsungElectronics directly. They are nonetheless able to
Diagram 1: Samsung Group Structure
Sources: Samsung Electronics, Samsung SDS, and Samsung Display Annual Reports