My mother bought her first LG refrigerator in 1998. It cost ₹18,500 — an enormous sum for a middle-class family in Lucknow, equivalent to perhaps ₹85,000 in 2026 purchasing power. The fridge worked for 19 years. It was replaced in 2017 by another LG, which my mother specifically requested because the first one had been so reliable. Last year, my own apartment got its first major appliance — a Samsung washing machine. I went with Samsung specifically because LG and Samsung felt like equivalent choices and the Samsung was on a better Croma sale that week. This is the kind of consumer trust that takes 60 years and tens of billions of dollars to build, and almost no other brand in the world has managed it.
For 9 years writing about Indian appliance markets, I've watched Korean brands transition from "imported electronics" status to genuine default status in Indian middle-class homes. The story behind that transition is less about specific products and more about how two Korean family businesses, starting from positions of remarkable disadvantage, built sustained competitive advantage through a combination of government-supported industrial policy, family-controlled long-term capital deployment, and absolutely ruthless R&D investment. The LG-Samsung duopoly in appliances isn't an accident. It's the product of deliberate decisions made by specific people over specific decades, and understanding it tells you a lot about how global manufacturing power gets built.
The piece runs eight chapters. Chapter 1 covers the postwar origins of both families and their original businesses. Chapter 2 covers the pivot to electronics in the 1960s. Chapter 3 covers the chaebol structure and government partnership. Chapter 4 covers the 1980s competition with Japan. Chapter 5 covers the 1990s globalization. Chapter 6 covers the semiconductor breakthrough that made Samsung the larger company. Chapter 7 covers family succession crises and corruption scandals. Chapter 8 covers the current state in 2026 and what's coming next.
The story of LG and Samsung as appliance giants begins not in electronics but in trading and chemicals — businesses that existed in colonial Korea decades before the Korean War. Understanding the founders' original businesses matters because the corporate cultures, capital structures, and family ownership patterns that defined LG and Samsung were established in this earlier era.
Lee Byung-chul, born 1910 in Uiryeong, South Korea, came from a relatively wealthy farming family. He attended Waseda University in Tokyo in the early 1930s — the elite Japanese university that educated many of Korea's future business leaders during the colonial period. After dropping out due to illness, he returned to Korea and in 1938 founded Samsung Trading Company in Daegu. The original business: exporting dried Korean fish, fruits, and noodles to Manchuria and Japanese-occupied northeast China. The name "Samsung" — three stars — reflected Lee's ambition for a "big, numerous, powerful" business, with three representing the auspicious Korean number.
Koo In-hwoi, born 1907 in Jinju, came from a similar agrarian background. Unlike Lee, Koo did not attend university, instead training in commerce through apprenticeship. By the early 1940s, Koo had established himself as a successful textile merchant in Busan. His pivot came in 1947, two years after Japanese surrender and Korean liberation, when he founded Lak-Hui (락희, pronounced "Lucky") Chemical Industrial Corp. The initial business: manufacturing cosmetic cream. Korean women had become accustomed to imported Japanese cosmetics under colonization; with imports cut off, Koo identified the opportunity for domestic production.
The Korean War (1950-1953) devastated both businesses but also created the conditions for their later expansion. Samsung's facilities in Daegu were destroyed; Lak-Hui's Busan operations were spared due to the port city's relative protection. The post-war reconstruction period brought massive US economic aid (approximately $4 billion in total aid 1953-1961), Japanese-style industrial planning approaches, and the strategic decision by the South Korean government to favour selected family-controlled businesses with subsidies, protected markets, and government contracts. This was the birth of the chaebol system — Korean conglomerates structured around founding families with government backing.
What "chaebol" actually means
The Korean word "chaebol" (재벌, 財閥) translates roughly as "wealthy family clan." It describes a specific business structure unique to South Korea: a large, family-controlled conglomerate operating across many industries (often everything from electronics to construction to insurance), with strong government relationships, cross-shareholding between subsidiaries that protects family control, and corporate cultures that resemble extended family obligations more than Western corporate models. By the 1990s, the top 30 Korean chaebols controlled approximately 40% of South Korean GDP. The system has been criticized for inefficiency, family-favoritism, and corruption scandals. It's also been credited with the rapid Korean industrial development that took the country from per-capita GDP of $80 in 1960 to $35,000 in 2024 — one of the fastest sustained economic growth episodes in human history. LG and Samsung are the two largest surviving chaebols, alongside Hyundai and SK. Their structures remain family-controlled today through complex cross-shareholding arrangements that have evolved through multiple legal reforms.
The transformation of both companies from their original trading/chemical businesses into electronics manufacturers happened during the 1958-1975 period — a transition driven by Korean government industrial policy, technology licensing deals with Japanese and American companies, and the founders' personal ambitions to participate in what they correctly identified as the most important coming industry.
LG's electronics origin was in 1958, when Koo In-hwoi founded Goldstar Co. Ltd. — initially manufacturing radios under license from Japanese companies. The first Goldstar radio rolled off the line in late 1959, making it Korea's first domestically-produced consumer electronics product. Goldstar became Lucky-Goldstar in 1983 (after merger consolidation with Lak-Hui), then formally renamed LG Electronics in 1995. The trajectory was incremental: radios (1959), refrigerators (1965), televisions (1966), washing machines (1969), microwave ovens (1971), air conditioners (1975).
Samsung's electronics origin came slightly later. The company stayed focused on trading, textile manufacturing, and sugar refining through the 1950s and most of the 1960s. Samsung Electronics was founded in 1969 — a decade after Goldstar — as a joint venture with Japanese company Sanyo. Lee Byung-chul recognized that Korea had successfully transitioned through textiles and chemicals; the next industrial phase had to be electronics if Samsung was going to grow further. The first Samsung electronics product was a 12-inch black-and-white television, produced in 1970. Within five years, Samsung had built a meaningful electronics division: TVs, refrigerators, washing machines, calculators.
The critical strategic insight that both companies developed during this period was the value of technology licensing followed by aggressive process improvement. Neither LG nor Samsung had the R&D capabilities to develop original electronics technology in the 1960s — they couldn't compete with Sony, Hitachi, Panasonic, or American companies on fundamental innovation. What they could do: license existing technology from Japanese partners, then ruthlessly improve manufacturing processes to produce equivalent products at lower cost with higher quality control. This template — license technology, manufacture better, eventually overtake the licensor — would define Korean industrial strategy for the next 50 years.
The Korean economic miracle that took place between roughly 1962 and 1985 — sometimes called the "Miracle on the Han River" — was driven by specific government industrial policy that explicitly favoured large, family-controlled conglomerates over either small-business or state-owned enterprise alternatives. Understanding how this worked is essential to understanding how LG and Samsung achieved their current scale.
The key policy framework was established under President Park Chung-hee (in power 1961-1979 following a military coup). Park's government implemented Korea's First Five-Year Economic Plan (1962-66) and subsequent plans through the 1970s. The basic strategy: identify specific industries where Korea could become globally competitive (steel, shipbuilding, textiles, electronics, automobiles), provide chosen large companies in those industries with subsidized capital, protected domestic markets, and export incentives, and demand in return that those companies meet aggressive export targets and continue scaling up.
LG and Samsung were among the largest beneficiaries of this system. The specific mechanisms of government support included: 1) Subsidized loans from state-controlled banks at below-market interest rates, often 50-60% below international rates. 2) Import protection for Korean-manufactured electronics through high tariffs on foreign competitors and quota systems. 3) Export subsidies for Korean electronics sold internationally, including tax breaks, foreign exchange privileges, and direct financial incentives. 4) R&D coordination: government-funded research institutions developed technologies that were transferred to chaebol companies at favorable terms. 5) Workforce development: government-funded technical education produced workforces that chaebols could hire without bearing training costs.
In exchange for this support, chaebol companies were expected to achieve specific export targets, employ specified numbers of workers, and reinvest profits aggressively in capacity expansion. The trade-off: companies that hit their targets received continued support; companies that failed faced cutoffs of subsidized capital and could quickly collapse. This created a Darwinian competition between chaebols, with the survivors emerging dramatically stronger than they would have been in pure market conditions.
"Korean industrial policy worked because it combined ruthless competition with patient capital. Companies that failed got destroyed; companies that succeeded got 30-year time horizons that no Western public company could match. LG and Samsung are the products of that specific combination."
— Priya Mehta, Editor, AppliancesThe chaebol corporate culture that emerged during this period had distinct characteristics that affected how LG and Samsung subsequently operated globally. Long working hours — 80-hour weeks were common, even celebrated. Strong hierarchy — Korean Confucian respect for age and authority translated into rigid command structures. Loyalty culture — employees expected to spend entire careers with one chaebol. Aggressive growth obsession — market share was prioritized over short-term profitability, sometimes at extreme cost. Family-business decision-making — major strategic choices were made by founding families rather than professional managers, with mixed results.
The 1985-1995 decade was when Korean electronics companies fundamentally challenged Japanese dominance — and won. The story of how this happened explains a lot about why LG and Samsung subsequently could challenge Western brands successfully.
By 1985, Japanese consumer electronics brands — Sony, Panasonic, Hitachi, Sharp, Sanyo, Toshiba — dominated global markets. They had effectively destroyed the American consumer electronics industry (which had collapsed during the 1970s as Japanese imports overwhelmed companies like RCA, Zenith, and Westinghouse). Japanese brands held an estimated 80%+ of global TV market share, similar percentages in audio equipment, and growing share in white goods. Korean brands at this point were considered "cheap copies" of Japanese products — competing primarily on price for budget-conscious markets in developing countries.
The Korean response came in two waves. The first wave (1985-1990) involved matching Japanese quality at consistently lower prices through manufacturing process improvements. Korean companies invested heavily in semiconductor manufacturing, panel production, and component supply chains — eliminating their dependence on Japanese suppliers and capturing more of the value chain. The second wave (1990-1995) involved moving upmarket with genuinely differentiated products — particularly in segments where Japanese companies had become complacent or where new technology breakthroughs created opportunities.
The specific breakthroughs that defined this period:
- Memory chips (Samsung, late 1980s): Samsung Electronics made the bet that became the most consequential decision in Korean industrial history. After massive capital investment (multiple billions of dollars over the 1980s), Samsung became the world's largest manufacturer of DRAM memory chips by 1993. This single business eventually generated the cash flow that funded all of Samsung's other expansion.
- LCD panels (both companies, early 1990s): when Japanese companies were focused on CRT television production, Korean companies bet heavily on LCD panel manufacturing. By 1995, Samsung and LG between them produced over 40% of global LCD panel supply.
- Microwave ovens (LG, late 1980s): a less glamorous but enormously profitable category. LG (then Goldstar) became the world's largest microwave manufacturer by 1990, producing private-label versions for dozens of Western retailers in addition to its own brand.
- Refrigerators with premium positioning (both companies, early 1990s): large-capacity, frost-free, stainless-steel-finish refrigerators specifically targeted at American and European premium markets, breaking the perception of Korean appliances as low-end alternatives.
By 1995, the Korean electronics challenge to Japan was being recognized globally. Samsung had surpassed Sony in some specific product categories. LG was competing head-to-head with Panasonic in appliances. The Asian Financial Crisis of 1997-98 would actually accelerate this transition — Japanese companies suffered through their "lost decade" while Korean companies, after initial pain, restructured aggressively and emerged stronger.
