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When you say the Japanese model is better, is this bearing out in the final financial picture? Samsung seems to have made a lot of the correct business decision

by geokon 10y ago

When you say the Japanese model is better, is this bearing out in the final financial picture? Samsung seems to have made a lot of the correct business decisions and is quite successful - even if they're corporate/ownership structure opaque and antiquated

twblalock 10y ago
The Japanese economy does not depend on a small handful of companies that are too big to fail. The Korean economy does.
- ekianjo 10y ago
  Actually not. Even if Samsung fails it would not fail as a whole company. Samsung does everything from computers to cargo ships and manufacturing tools - there's a single umbrella name but there are tons of underlying separate entities inside the same group. Very much like Mitsubishi in Japan.
  - twblalock 10y ago
    Mitsubishi is not under the control of a single family. It was one of the original zaibatsu, but it is now quite different. Most of the large Japanese conglomerates do not have any kind of central control, and the top companies in the group are relative equals. They are not heavily dependent on each other. If one of the companies were to exercise poor judgment, most of the rest of the companies in the group would be fine. In contrast, Samsung may be incorporated as multiple companies, but one family and its loyalists call the shots at every company within the group. If that small group of people were to exercise poor judgment, the entire Samsung group would suffer. It therefore is entirely possible for Samsung to fail as an entire company, just as Daewoo did in the late 1990s due to poor decisions and criminal fraud committed by the family that controlled it. Just like Samsung, Daewoo was a group of companies that transacted in many industries, but that didn't matter because one family called the shots at every company within the group. Samsung could fail in the same way. Furthermore, about 20% of South Korea's GDP is produced by Samsung. There is no comparable situation in Japan or most other developed economies.
    - ekianjo 10y ago
      > Furthermore, about 20% of South Korea's GDP is produced by Samsung. There is no comparable situation in Japan or most other developed economies. Precisely because the domestic market in Korea is small compared to Japan's or any other developed country. When you have a worldwide market leader industry coming from a small country, this situation is bound to happen. EDIT: note that in other developed countries you see the exact same phenomenon at region/metropolis level - look how Detroit was dependent on the whole GMC business and factories. This is the very same thing at play at a different level.
    - patio11 10y ago
      They are not heavily dependent on each other. I do not disagree with your statements with regards to Korea (they match my relatively untutored understanding), but I would not describe my understanding of Japanese megacorps as untutored, and I find myself in violent disagreement with this line. What's your over/under on what percentage of Toyota Industries' revenue comes from Toyota Motors? What is your over/under for what portion of the shares outstanding of Toyota Industries that Toyota Motors owns outright, in its own name? The control issues are... nuanced. The financial entanglements? They're not nuanced.
    - sanxiyn 10y ago
      > Furthermore, about 20% of South Korea's GDP is produced by Samsung. There is no comparable situation in Japan or most other developed economies. In 2011, Foxconn's revenue was 20% of Taiwan's GDP. Nokia's revenue was also 20% of Finland's GDP.
- hkmurakami 10y ago
  Honestly, if Toyota fails, so will several thousand large to small companies that are part of the vast pyramidal supply chain. That would be catastrophic. If you remove their top three automobile companies and their top 3 Shosha firms (and maybe UFJ + Mizuho), they are not in good shape.
  - Thimothy 10y ago
    Come on, if you take out of the map the biggest 6 companies of any country, they will be in deep trouble. Exceptions could be the US or China... Every European country has it's handful of companies that have consolidated and by their supply chain drive a huge part of the economy.
- gozur88 10y ago
  Samsung is a profitable company. This would potentially be a big economic problem if it they were cooking the books, but from what I've read that's not the case.
ekianjo 10y ago
> Samsung seems to have made a lot of the correct business decisions and is quite successful That's because of the nature of the business in Korea. To make it big in Korea you need to be successful OUTSIDE of Korea as well, the domestic market is too small. Japan's domestic market is quite large in itself and many domestic companies can rely on it to survive, which is very bad for such large corporations, who stay reluctant in competing overseas.

by geokon 10y ago

twblalock 10y ago

The Japanese economy does not depend on a small handful of companies that are too big to fail. The Korean economy does.

ekianjo 10y ago
Actually not. Even if Samsung fails it would not fail as a whole company. Samsung does everything from computers to cargo ships and manufacturing tools - there's a single umbrella name but there are tons of underlying separate entities inside the same group. Very much like Mitsubishi in Japan.
- twblalock 10y ago
  Mitsubishi is not under the control of a single family. It was one of the original zaibatsu, but it is now quite different. Most of the large Japanese conglomerates do not have any kind of central control, and the top companies in the group are relative equals. They are not heavily dependent on each other. If one of the companies were to exercise poor judgment, most of the rest of the companies in the group would be fine. In contrast, Samsung may be incorporated as multiple companies, but one family and its loyalists call the shots at every company within the group. If that small group of people were to exercise poor judgment, the entire Samsung group would suffer. It therefore is entirely possible for Samsung to fail as an entire company, just as Daewoo did in the late 1990s due to poor decisions and criminal fraud committed by the family that controlled it. Just like Samsung, Daewoo was a group of companies that transacted in many industries, but that didn't matter because one family called the shots at every company within the group. Samsung could fail in the same way. Furthermore, about 20% of South Korea's GDP is produced by Samsung. There is no comparable situation in Japan or most other developed economies.
  - ekianjo 10y ago
    > Furthermore, about 20% of South Korea's GDP is produced by Samsung. There is no comparable situation in Japan or most other developed economies. Precisely because the domestic market in Korea is small compared to Japan's or any other developed country. When you have a worldwide market leader industry coming from a small country, this situation is bound to happen. EDIT: note that in other developed countries you see the exact same phenomenon at region/metropolis level - look how Detroit was dependent on the whole GMC business and factories. This is the very same thing at play at a different level.
  - patio11 10y ago
    They are not heavily dependent on each other. I do not disagree with your statements with regards to Korea (they match my relatively untutored understanding), but I would not describe my understanding of Japanese megacorps as untutored, and I find myself in violent disagreement with this line. What's your over/under on what percentage of Toyota Industries' revenue comes from Toyota Motors? What is your over/under for what portion of the shares outstanding of Toyota Industries that Toyota Motors owns outright, in its own name? The control issues are... nuanced. The financial entanglements? They're not nuanced.
  - sanxiyn 10y ago
    > Furthermore, about 20% of South Korea's GDP is produced by Samsung. There is no comparable situation in Japan or most other developed economies. In 2011, Foxconn's revenue was 20% of Taiwan's GDP. Nokia's revenue was also 20% of Finland's GDP.
hkmurakami 10y ago
Honestly, if Toyota fails, so will several thousand large to small companies that are part of the vast pyramidal supply chain. That would be catastrophic. If you remove their top three automobile companies and their top 3 Shosha firms (and maybe UFJ + Mizuho), they are not in good shape.
- Thimothy 10y ago
  Come on, if you take out of the map the biggest 6 companies of any country, they will be in deep trouble. Exceptions could be the US or China... Every European country has it's handful of companies that have consolidated and by their supply chain drive a huge part of the economy.
gozur88 10y ago
Samsung is a profitable company. This would potentially be a big economic problem if it they were cooking the books, but from what I've read that's not the case.

ekianjo 10y ago

> Samsung seems to have made a lot of the correct business decisions and is quite successful That's because of the nature of the business in Korea. To make it big in Korea you need to be successful OUTSIDE of Korea as well, the domestic market is too small. Japan's domestic market is quite large in itself and many domestic companies can rely on it to survive, which is very bad for such large corporations, who stay reluctant in competing overseas.