Editorial: Dear Samsung Korea, It’s Time To Clean House

The latest blogger scandal shows how systemic the company’s corruption runs. It’s time for Korea to clean house, and fast, or face irrelevance in the tech sector abroad.

In case you missed the scandal, The Next Web got a plea for help from a group of Indian bloggers. They were shuttled to Germany’s IFA — for free, by Samsung, to cover the event.

Only upon arriving in Germany, they were allegedly handed NDAs… and Samsung t-shirts, and told they would be demonstrating devices for Samsung. What was a media flight (a common practice in the press), became a staged promotion. Nobody in their right mind, in the independent media, would have signed on to such an event.

The campaign was reportedly run by Samsung’s Mobiler team, a social media group for Samsung Europe.

To make a long story short, the bloggers claim they were threatened with not having a flight home, should they not man the booth for Samsung. So, they stood there and didn’t speak. Samsung, in retaliation, cancelled their post-IFA flight and booked them a flight for the following day home.

The story did appear to have  a happy ending, at least according to some reports Nokia, apparently/eventually flew them back at the end of IFA. If so, class act, Nokia.

This is a textbook example of why Samsung Korea has lost control of its company. You’d have to be smoking glue to think this is a proper way to treat bloggers, regardless of the size of their audience.

Sure, Samsung will probably post some apology and explanation. We don’t believe a word that comes out, because people know that their jobs will be on the line. We expect the individuals inside Samsung to lie to save their jobs.

Samsung today profits primarily from two factors: Semiconductor sales, and low-to-mid range consumer electronics. Devices like the Samsung Galaxy S III are halo devices. They are sold to carriers at much lower profit margins, far lower than iPhone. When they are bought by the consumer directly, it is usually at the end of the device’s lifespan, or on the refurbished market.

In short, Samsung is in a dangerous position right now. Its largest customers (Apple, etc) are figuring out ways to cut Samsung out of the loop. This is why litigation between Apple and Samsung are on the rise, whereas Google and Apple are trying to mend fences simultaneously. It’s a lot easier for Apple and Google to get along, especially with Google owning Motorola. Neither needs Samsung anymore.

So, in a time when Samsung needs its customers, needs loyalty, and needs outreach, what is Samsung Europe doing? Giving the press the finger. Nice.

Korean companies often operate on delegation. We’ve seen it happen all the time over the past decade, especially between LG and Samsung. The products that ship in the US and Europe a decade ago were completely, totally different from what shipped in their home country. As competition has risen, and technologies refined, that has changed. The products are now pretty much identical.

But, what hasn’t changed, is the management structure. Korean companies ponder why they are failing abroad. It’s partly a language barrier, and partly an unwillingness to sit in the trenches and see the problems for themselves.

Our advice, to Samsung, and to LG to a degree… clean house, now. Get on a plane, and fly over to the US for the next six months. You have the money, rent a house, and live here. See how the devices compete in stores, see how they act stateside. See how your team operates stateside. Then, do another six months in Europe. Don’t fly back home very much. Stay here and see what is systemically failing about your company’s leadership. Do that, and you might have a chance at staying on top.