Watchful eye on the big picture as TV firms battle

A South Korean woman uses a Samsung computer at a shop in Seoul. Picture / Reuters.

SOUTH KOREA - Arriving at Samsung Electronics' headquarters at Suwon is a surprisingly personal affair. For here in this satellite city of apartment blocks and industrial units, an hour through crawling traffic from Korea's capital Seoul, a warm welcome awaits.

Stepping through the sliding doors of the world's largest television-maker and fastest growing global brand, I am greeted by a 6m-long screen emblazoned with the message "Welcome! Mr Jonathan Brown". As PR offensives go, it's naive - crude, even. But still, I'm touched.

A young female company official swiftly appears brandishing a digital camera and photographs me standing self-consciously in front of the screen. Moments later she presents me with the picture etched on to a computer mouse mat. "I will treasure it," I say, sincerely returning the official's short bow. Such is the world of multinational business, Korean-style.

Until Samsung arrived in Suwon in 1969, the city was best known for the ill-fated attempt by its 19th-century ruler King Jeongjo to establish his capital here. Jeongjo's citadel is now overrun by urban sprawl and flanked by six-lane highways.

Today the city is famous as a capital of a different sort - as the centre of the world's booming television industry. This year global TV sales fuelled by the World Cup, high-definition television and a new generation of huge, flat-screen sets, have peaked at more than six per second.

By the time the final whistle blows in the Olympic Stadium in Berlin next month, the world's six TV-making giants, led by Samsung, will be well on the way to having shifted nearly 200 million. The fans meanwhile, from the pubs of London to the shanty towns of Africa, will have spent some 50 billion hours between them staring at a set. But what can be made of such awesome figures?

To Thomas L. Friedman, author of the best-selling paean to the powers of international business, The World is Flat, these events - economic, technological and personal - are emblematic of an era he has described as "Globalisation 3.0".

In this vision of the present, a "flattening" of the world has occurred. It is one where the processes of globalisation, with its emphasis on hi-tech outsourcing, off-shoring and supply chaining, have reaped rich dividends for both companies and individuals alike.

It is a vision shared, if not embodied, by Samsung. In the vast "clean rooms" at another of its huge new plants at Cheonan Asan, masked, white-suited workers are engaged in the process of building LCD flat-screens. Or, as the company prefers rather more grandly to put it, they are creating the "digital window for the human dream".

About 7000 people work here. Hundreds of workers are bused in each day on a fleet of company coaches. Others are billeted at the firm's Orwellian-sounding dormitory tower, Joy Plaza.

The valley is earmarked for rapid development as the company cashes in on what it foresees - in another echo of Friedman - as a forthcoming "digital renaissance". In this brave new future, the buzzwords are connectivity and networking. But while Friedman sees the digital future in terms of moving so-called "grunt" jobs to cheaper economies elsewhere in the world, Samsung also sees exciting new consumer products.

It is a world of "convergence", where gadgets from the home computer to the camera are brought together with an interactive TV screen at their hub. The driving force is technology.

Heart of the economy

Friedman has famously lamented the failure of the United States to get young people into science and engineering. In Asia's thrusting new economies, he says, "Bill Gates is Britney Spears ... in America today, Britney Spears is Britney Spears, and this is our problem."

Peering through the gallery windows at Samsung, it is clear that the processes being perfected here will be at the heart of the 21st-century global economy. And the "clean" workers, who go about their business with an other-worldliness reminiscent of astronauts on the moon, are the star performers.

Gee Sung Choi, president of Samsung's US$20 billion-grossing digital media business, is passionate about the future being built by his workforce. From his office on the 36th floor of a new research tower at Suwon, decked out with cool Korean modern art hangings and a Henry Moore, he exudes an air of forceful determination. "The digital renaissance has just started. We are travelling at great speed. Not just the speed with which we can develop products but now we can make price reductions much faster than in the past. This way our performance will also increase," he says.

Preparations for the TV boom of 2006 have been undertaken on a massive scale. "We anticipated the level of demand accurately but we had to make a lot of changes. First we had to invest in the raw materials and plan production. The investment process began three years ago. We had a clear vision and we had enough money. Others didn't see this coming and they didn't take the challenge," he says.

Now, the company has overtaken Sony and Philips to become the world's number one TV maker. Today the Samsung name graces Chelsea's football shirt, at the cost of £50 million ($146.3 million) - setting a record as the highest deal ever struck with a Premiership side.

It sponsors the NFL in the United States and is a Worldwide Partner to the Olympics. The electronics company is now valued at more than US$100 billion, accounting for 17.5 per cent of Korea's exports.

Yoon-Soon Ahn, Suwon's principal engineer, is enthusing about the quality of his latest HD-ready TVs. We are watching a specially prepared film, shot by Samsung's new strategic partner, Discovery Channel, aimed at showcasing the virtues of the format.

A sumptuous procession of pin-sharp images and vibrant colours process across the banks of screens. It is said that Hollywood stars are in a state of muted outrage over the imperfections and scalpel marks that might be revealed under this new bright spotlight. But still the studios are backing the format.

What is being hailed as the greatest consumer technology battle since Betamax was crushed by VHS, is set to begin. The stakes are huge.

On one side is the Blue-ray player - a high-definition version of the DVD, backed by Sony and made by Samsung. On the other is HD DVD, with the support of Toshiba, Universal and Microsoft. Hundreds of millions of dollars have been lavished on the development of the two products. But, say the analysts, there can be only one victor. The market for the winner will be immense, with nearly 40 million units forecast to be sold in 2010. Samsung is confident that it has backed the winner.

This would no doubt bring a smile of satisfaction to the Samsung Group chairman, Kun-Hee Lee, named by Forbes magazine in 2006 as Asia's richest man.

Today, Lee is something of a strategic figure in the largest and most profitable of Korea's chaebol, the vast, family-run conglomerates that include LG and Hyundai. These giants propelled the country out of the ashes of the Korean War, operating a unique and controversial business model based on an unflinching work ethic and an iron will to grow. The chaebol were the engine of growth for the country's breakneck industrialisation. They also created dynasties of spectacular wealth.

But in 1997 disaster struck. A series of financial crises across Asia precipitated meltdown. Eleven chaebols collapsed in just two years. The reverberations continue to rumble. Last month Woo-choong Kim, the founder of Daewoo Group, which collapsed under debts of US$80 billion was sentenced to 10 years in jail and ordered to hand over US$22 billion. Weeks earlier prosecutors indicted Mong-Koo Chung, chairman of the car-maker Hyundai Motor for his alleged role in a bribery scandal. Samsung emerged from the rubble relatively unscathed although it was forced to shed a third of its workforce.

Today Korea's stock market has enjoyed the biggest bounce-back in history. The country has built not just a high-speed rail system since then but a new network of highways and the most advanced system of broadband and mobile coverage anywhere in the world. Observers describe the progress in "dog years" - what the West achieves in seven, Korea can do in one.

There are subtle changes at play. The shock of the late 1990s has perhaps fatally undermined the jobs-for-life culture. The rigid company hierarchies are also being swept away.

Only as recently as 2002 did the country finally adopt a five-day working week, though many workers still sneak to the office on Saturdays.

In common with Western countries, commentators increasingly complain that young people are more interested in singing and acting than physics and maths. For the first time the Korean Wave, a group of young stars including BoA Kwan, who, it may dismay the likes of Friedman to know, is acclaimed as "Asia's Britney Spears", are exporting culture rather than manufactured goods. And Samsung, too, like the rest of the country, is looking outwards for new talent, scouring universities from Shanghai to Chicago for its recruits.

But the company has embraced the nostrums of Globalisation 3.0. The majority of its TV sets are not now built at home, but assembled at one of 12 factories in 11 countries, where manufacturing wages are lower. Design centres have been established across the world, from Italy to the US. Research and development is going on from Rio de Janeiro to London.

And on the streets of Korea, crowds of up to a million will gather once more to watch their home team, which astonished the world and their fans last time by finishing fourth, on giant TV screens being put up across the country. But whatever happens on the field, Korea's TV industry is already claiming victory in this World Cup.

- INDEPENDENT