A Study on the Entrepreneurial History of Byung-Chul Lee, Korean Representative Entrepreneur
Authors:   Asia-Europe Perspective Association, Isao Yanagimachi Isao Yanagimachi 
Published: June 2018

In the study of entrepreneurial history, it is very important to consider not only successful or unsuccessful case itself, but also the process bringing high performance or failure as a result. And we also emphasize the process how an entrepreneur overcome difficult situations.
The life of Byung-Chul Lee, founder of Samsung group, the largest and representative Korean chaebol, was said to a microcosm of Korean modern history. Therefore, his entrepreneurial history has been formed with relationship to the politics change of turbulence. In other word, Lee’s life was a typical life full of ups and downs.
The purpose of this paper is to analyze the process of Lee’s overcoming a collapse and attempting a comeback in 1960’s and to evaluate his entrepreneurial activity in the historical context. I took up two political cases that happened in 1960's by this study.
The first case is the illicit wealth accumulation investigation after the 4.19 student revolution in 1960. At the end of 1950’s, Samsung was the top chaebol and Byung-Chul Lee had influence in the Korean business community. Samsung made a rapid growth in 1950’s with good relationship to Syng-man Rhee administration. After the military coup led by General Chung-Hee Park through Korea in May 1961, the military junta attempted to purge chaebol entrepreneurs with the Special Law for the Disposal of Illicit Wealth Accumulation. Byung-Chul Lee was a major target of the purge. In accordance with the special law, most of main entrepreneurs were detained, and expected to forfeit their assets.
After coming back to Korea from Japan, Lee was detained and he met General Park the next day. At the meeting, Lee persuaded General Park that the arrested business executives were the best entrepreneurs and that tax evasion was unavoidable for business survival because the tax laws were made under the emergency situation of war. After the meeting, Lee, the head of the illicit profiteer, emerged as a leader representing Korea entrepreneurs again. He served as the first president of a business association that later became the Federation of Korean Industry (FKI).
Being called as the head of the illicit profiteer was humiliation for him, and he needed legal measures in which he could express his and businessman’s opinion. So Lee decided to involve in journalism and broadcasting businesses, such as Joongang Daily News (founded in 1965) and Tongyang Broadcasting (founded in 1964).
The second case was “saccharin smuggling” scandal in September 1966. Byung-Chul Lee had attempted to build a fertilizer plant in the late 1950s. Being an agricultural country, Korea was short of fertilizer supply. But, after the 4.19 student revolution in 1960, he failed to realize his plan to build a fertilizer plant. President Park urged Byung-Chul Lee to restart the plan again. Finally, Lee founded the Hanguk Fertilizer Company with a financial loan from Mitsui for US$41.9 million in August 1964. It was the largest industrial project of the period in size.
In September 1966, when the construction of the plant was ending, the company was involved in the so-called “saccharin smuggling” scandal. Lee’s second son, Chang-Hee Lee was profiting illegally by smuggling saccharin and other valuable import items. Samsung and Lee’s business ethics were soon the target of public criticism at the National Assembly. Lee was forced to donate 51 percent of the company’s shares to the government and announced his retirement from the business world to the public. Lee and Samsung had a serious setback in business and reputation in the late 1960s because of the incident of the Hanguk Fertilizer Company.
One year later, however, Lee decided to embark on the reconstruction of Samsung group, and he was reinstated in his previous position. As a reconstruction plan, Lee decided to entry new business area, the electronics industry. Samsung planed to build an electronics factory with Sanyo and NEC.