Samsung, one of the leading tech companies in the world.

Unlike some of its American competitors like Apple or Dell—Samsung wasn’t formed in

someone’s garage or a college dorm room.

No, Samsung emerged in the wake of the most destructive war in Korean history and in this

video we’ll see how all of that carnage paved the way for Samsung’s global domination.

This video is brought to you by Skillshare, where you can watch my two classes on how

the stock market works.

The first half of the twentieth century was not very kind to Korea, to say it mildly.

After a hundred years of political interference, the Japanese Empire had reduced Korea to merely

a puppet state, formally annexing it in 1910.

As you can imagine, the Japanese occupation was brutal, with many Korean farmers and businessmen

being driven off of their lands and out of their factories.

As an ambitious colonial power, Japan was eager to settle Korea with its own people,

which is why Japanese ownership of Korean land, for example, skyrocketed from 8% in

1910 to over 50% just twenty years later.

For a time, it seemed as if the Korean nation was destined for oblivion, for the Japanese

not only forced the Koreans to change their names, they also prohibited schools from even

teaching the language.

It took the crushing Japanese defeat during the Second World War for Korea to become independent

once again and in 1945, despite the chaos of American and Soviet military administration,

the people of Korea were cautiously optimistic.

One such optimist was Lee Byung-Chul, who was one of the few Koreans lucky enough to

have started their own business during the Japanese occupation.

He had created a small transportation company in 1938 called Samsung, which specialized

in exporting groceries.

a city on the southeastern coast that the Japanese were using as their biggest exit

port from which they transported all the exploited Korean resources.

Now, Lee wasn’t a true collaborationist, but his usefulness to the regime granted him

many favors that weren’t available to most Koreans, like getting loans from Japanese

banks.

While Samsung’s Japanese period was decent for its time, the newly-independent South

Korea presented immense opportunities for Lee.

The years immediately after the liberation were very profitable for pretty much every

Korean businessman for a simple reason: while the Japanese administrators were gone, their

assets remained and the Korean government was handing them out left and right for cents

on the dollar in an effort to rebuild the country.

Everything looked great for Samsung, but then the Korean War broke out.

North Korea’s invasion quickly turned into a proxy war between the Soviet Bloc and the

Capitalist West, with modern weapons devastating major cities and industrial centers in South

Korea.

Most of Korea’s factories were damaged during the three long years of war; for example,

over 60% of textile and chemical facilities were outright destroyed, as was half of the

country’s rail.

At the end of the war— Korea’s infrastructure was in desperate need of repair, and its companies

were too young to sustain its economy, which was honestly on its last legs.

Prices rose dramatically, as the South Korean government was forced to print more money

to finance the country’s vast military expenditures.

Hyperinflation was so extreme that in July 1953, Korea’s money in circulation was 24

times greater than just three years earlier.

The future of South Korea and Samsung by extension was looking increasingly uncertain, but luckily

for them, Uncle Sam had their back.

After the war, the US created essentially the Korean version of the Marshall Plan, with

the United Nations following suit soon after.

Throughout the 1950s, three billion dollars were sent to the Korean government, which

then chose medium and large companies worthy of the investment.

Samsung was among the companies to benefit from this relief aid, no doubt thanks to Lee’s

close friendship with the first South Korean President.

In fact, the extent of state help that Samsung received during his tenure was mind-boggling.

While usually imposing very strict limits on exports, the government essentially gave

Samsung a free pass, allowing it to become the biggest exporter of scrap iron, for example,

after the war.

Funneling American relief money into Samsung allowed it to expand beyond simple transport

and into actual manufacturing: in 1953 they started making sugar and flour, and then textiles

a year later.

Buying ruined factories with American money and then rebuilding them was such a lucrative

business that Samsung grew at an average of 93% annually during the 1950s.

However, relief aid was only part of the picture: the Korean government was also extending generous

credit to Samsung at very competitive rates.

Lee was one of the biggest beneficiaries of government lending through government associated

banks, and what’s really hilarious is that once he got the money, he turned around and

started buying those very same banks.

By the end of the decade, Samsung had taken over three of the banks associated with his

friend’s regime and was also branching out into insurance and chemicals.

Samsung had grown so large that not even a revolution could bring it down; thus, when

the military overthrew his friend’s regime in 1961, Lee was probably not too worried.

Under the new administration, the Korean economy opened up and focused on massive export growth,

for which Samsung was perfectly positioned after a decade of state-funded preparation.

Thus, despite a second regime change in the span of 15 years, Lee was once again in the

good graces of the Korean government.

The most popular Samsung division we know today was, of course, also created with government

aid: in 1969 the government passed legislation reducing taxes by 50% on companies operating

in the electronics business, which at the time was pretty much only Samsung Electronics,

which was created the very same year.

During the 70s Samsung became a symbol of Korean modernization as it helped bring televisions

and washing machines to the home of every family, and from then on the jump into semiconductors

and more recently smartphones seems only natural.

Of course, none of this would’ve been possible without Lee’s brilliant positioning close

to whichever political power held sway during his time and even today Samsung and the government

go hand in hand.

Luckily for you, Samsung is a public company, or at least its biggest division is, so you

can readily profit off of the close relationship Lee forged many decades ago.

If you’d like to learn how to capitalize on this on the stock market, you’ll probably

enjoy the two investment courses I have on Skillshare.

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on the planet, with thousands of courses on topics like productivity, motion graphics,

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teasers I post for every upcoming video.

We’re gonna hear each again in two weeks, and until then: stay smart.