How Samsung out-hustled Japan Inc.

On the sidelines

Back then, Japanese executives and consumers never called Samsung by its preferred pronunciation, "Samsung." Instead, they called it "Sansei," translating the Korean word Samsung—"Three Stars"—into Japanese.

The 1970s and 1980s were heady days for the Japanese consumer electronics industry. JVC (where I once worked) and Sony were engaged in a fierce VCR format war; Sony created a brand new product category called Walkman; Pioneer, RCA and JVC fought tooth and nail in a pre-DVD, analog video-disk format battle; Sony and Philips formed an alliance to push CD.

By contrast, Samsung's consumer product lines consisted of TVs, radios, radio cassette recorders and appliances. For Samsung, VCRs represented a particularly high barrier to entry, Yun said.

By the early 1980s, leading Japanese consumer electronics companies were working together to establish various cross-licensing agreements. Samsung then, with less intellectual property to trade, was never one of them.

To build a VCR, "We had to pay royalties not only to JVC but also to Sony, in addition to RCA, since each VCR integrated [an RCA-patented] TV tuner," recalled Yun.

The soft-spoken Yun described the Samsung of those days as a "kohatsu"—a "latecomer," in Japanese—to the electronics industry. Although Yun was too polite to say so, Japanese vendors then used the term, which carries a slightly negative connotation, to shut Koreans out of their clique. During that era, "Japanese manufacturers never let [Samsung] be part of their group or alliance," Yun acknowledged.