Lee Kun Hee Still Business Savvy

The AsiaN – Park Se Jun

Samsung Electronics will issue a product recall for the “Galaxy Note 7,” the electronics giant’s new flagship, over the smartphone’s battery explosions. Since the first report of an exploding battery on the 24th, Samsung has kept a close eye on the situation. On the 31st, after six complaints of battery explosions were received, Samsung placed a hold on new orders from retailers.

Investigators think faulty batteries caused explosions in the “Galaxy Note 7.” Samsung SDI, a member of the Samsung corporate family, and Hong Kong-based Amperex Technology Limited (ATL) supply batteries for the beleaguered smartphone.

The batteries at fault here are likely Samsung SDI products. Samsung SDI produced most of the batteries sold in Galaxy Note 7s in South Korea.

The board concluded that if poor quality control is the issue, the best way to keep consumer trust is to issue quick settlements and a product recall.

The South Korean government got involved as well. The Korean Agency for Technology and Standards (KATS) requested Samsung Electronics to file an investigative report on the explosions of the Galaxy Note 7. KATS is authorized to require companies issue a product recall.
Samsung’s quick response reminds us of the fire-burning ceremony in 1995, when Lee, Kun Hee set fire to 150,000 phones.

In 1993, the elderly chairman announced at the board meeting in Frankfurt, Germany that “the company will fail if customers are disappointed by faulty products.”

After the announcement, Samsung put quality control at the top of its agenda. In October 1994, the company’s first phone, the Anycall SH-770 dominated the market in mere months of release. By March of 1995, the SH-770 had a 30% share of the market, but 11.8% of phones sold were defective. Lee issued a full refund for all defective phones. On March 9th, he collected all 150,000 returned phones and on set fire to the pile while the company watched.

11 and a half years later, Samsung is swallowing another major loss to protect consumer trust and quality control. The company’s last sacrificial fire cost about $45 M.