Samsung in Suwon: A City of Its Own
30 kilometres south of Seoul, in Suwon, Samsung has created its own city — Samsung Digital City with its own health clinic, kindergardens, restaurants, voluntary associations, bus system, sport facilities …
Suwon has grown from a small settlement into a major industrial and cultural centre, 30 kilometres south of Seoul. Despite being an old walled city — inscribed on the UNESCO World Heritage List in 1997 –, it experienced the most significant growth after the Korean War, in which Samsung’s inventories in Seoul were damaged and Lee Byung-chul, the founder of Samsung, started his business anew. Thanks to Electronic Industry Promotion Act and Electronic Industry Promotion Fund that supported large private investments in the late 1960s, Samsung entered the electronic industry in 1969 and Samsung Electronics was founded in Suwon, where it has its headquarters (Samsung Digital City) and a large factory complex. With the growth of Samsung, several of its subsidiaries located their activities in Suwon (Samsung Electro-mechanics, Samsung LED, Samsung SDI…). Moreover, in the neighbouring Yongin, Samsung SDI has its headquarters and Samsung Electronics has a semiconductor factory (Samsung Nano City Yongin), while in the neighbouring Hwasung, another Samsung Electronics semiconductor factory (Samsung Nano City Hwasung) is located. Suwon is thus an important education and research centre with 11 universities and increasing proportion of foreign inhabitants.
Samsung Digital Valley in Suwon
Samsung Electronics location in Suwon is regarded as a part of Samsung Digital Valley, in which Samsung’s R&D and high-tech manufacturing complexes are located in Gyeonggi’s Suwon, Yongin and Hwasung (Colantonio et al., 2014) and is often cited as a demonstration of the successful economic transition that was generated through Korean government’s Semiconductor Promotion Policy, LCD Industry Promotion Policy, Venture Business Promotion Policy and Capital Region Management Policy.
Despite Suwon, Yongin and Hwasung being administratively separate cities, they are geographically proximate. Moreover, Samsung’s locations are in close proximity as the distance between Yongin and Hwasung locations is only 2 kilometres and both are 4 kilometres away from the Suwon location (Samsung Village, 2014a).
Since cities themselves did not provide several of the services for a creative and innovative milieu, Samsung Electronics has been developing these on its own within its premises in Suwon, Yongin and Hwasung since its inception in 1969 and especially after the establishment of the first research institute R1 in 1980. All locations in Suwon, Yongin and Hwasung are functionally integrated into Samsung’s IT cluster (Colantonio et al., 2014). Samsung Electronics is pursuing an industrial cluster strategy primarily through Samsung Digital City projects and Samsung Nano City projects. The Samsung Digital City project in Suwon thus combines and connects several parts of Samsung’s IT industry in a creative nexus, in particular, product and process innovation (Colantonio et al., 2014), while Samsung Nano City projects in Yongin and Hwasung represent semiconductor complexes of Samsung Electronics.
The Samsung Digital Valley has had significant impacts on the national economy, Seoul and its metropolitan region, and in particular on Suwon. Samsung Electronics employs 33,000 people in Suwon, an estimated 22,502 in Yongin and 9,926 in Hwasung (Colantonio et al., 2014). Moreover, Samsung’s first- and second-tier suppliers in Suwon also provide more than 10,000 jobs (Colantonio et al., 2014).
Suwon and Samsung Digital Valley, in general, have been core R&D hubs for Samsung Electronics since 1980 when the first research institute R1 was established. Today, Samsung Electronics has five research institutes located in Samsung Digital City, each founded with a specific aim: R1 (1980) to increase patent portfolio (seven times increase after the founding of the research institute), R2 (1987) to save mobile development costs relating to international standards, R3 (2001) to establish international prominence in mobile phone and telecommunication businesses, R4 (2005) to expand Samsung’s share in digital television market, and R5 (2013) to integrate IT and mobile divisions and strengthen the capacities to adapt to dramatically changing mobile markets (Samsung Village, 2014b). The last extension comprises of specialist development laboratories, audio development facilities, collaboration spaces with 150 video conference rooms, a large-scale auditorium for 700 people, and a co-working lab with 1000 meeting rooms (Samsung Village, 2014b).
Company-subsidised welfare from cradle to grave
Due to the rather minimal welfare provision of social and public services by the state in South Korea, Samsung Electronics’ social programmes and corporate social responsibility in Suwon focus primarily on the provision of these basic welfare services. As the welfare state in South Korea is only slowly emerging, Samsung Electronics with its broad offer of free social services in Samsung Digital City stands out as an attractive and reliable employer.
Samsung Electronics provides all regular and non-regular employees with social insurance (including national pension, health insurance, employment insurance, and occupational health and safety insurance). Moreover, it provides several programmes within Samsung Digital City in Suwon: recreational areas, guesthouses, medical facilities, kindergartens, cafeterias and bars. All of these offer free of charge services to their employees, their spouses and children. (Samsung Newsroom, 2014).
Social programmes are very extensive and cater to most of the daily needs of employees:
- Healthcare: Within Samsung Digital City, several medical facilities (Samsung Hospital Healthcare Center) with free healthcare services can be found — these offer physicians, flu shots, dental treatments and traditional acupuncture (Samsung Newsroom, 2014).
- Childcare: Kindergartens with 150 teachers look after 900 children of Samsung employees in Samsung Digital City (Samsung Newsroom, 2014).
- Mobility: Samsung provides 500 shuttle buses to 103 destinations from Samsung Digital City (Samsung Newsroom, 2014).
- Recreation: Samsung Digital City has ten basketball courts, four badminton courts, three soccer fields, two baseball diamonds, a climbing wall and an Olympic-sized swimming pool (Samsung Newsroom, 2014).
- Food: Samsung Digital City serves up to 72,000 meals (breakfast, lunch, dinner) with 92 different menus daily (Samsung Newsroom, 2014). The cafeteria with more than 4100 seats sources its produce from Suwon’s neighbourhoods, creating a strong link with farmers and producers (Samsung Village, 2014a).
Samsung Electronics encourages and provides the support for several of its employees social activities, whether it be organised company events or clubs, events or courses. On Family Day, Samsung Digital City is transformed into a theme park for employees’ families and neighbouring residents, while throughout the year several music events (string quartet and rock concerts), celebrity talk shows, and more than 650 hobby clubs and 490 sports clubs take place within the premises of Samsung Digital City (Samsung Newsroom, 2014).
Many of the above-mentioned programmes and services are provided by other Samsung companies that play an important role in the social, economic and cultural development of South Korea. Samsung Life Insurance and Samsung Fire & Marine Insurance provide a broad range of insurance packages; Samsung Card is South Korea’s largest issuer of credit cards; while Samsung Securities, Samsung Asset Management and Samsung Venture Investment provide several financial services, supporting Samsung’s and others activities.
Moreover, in and outside Suwon, Samsung is present in the hospitality and tourism services with Hotel Shilla and Samsung Welstory, in the fashion industry with Cheil Industries and Cheil Worldwide, in medicine and biology with Samsung Medical Center, Samsung Biologics and Samsung Bioepis, and in economic research with Samsung Economic Research Institute.
Samsung Electronics’ social programmes are primarily concentrated in Samsung Digital City and are not provided for others. Samsung Electronics’ investments in public infrastructure outside Samsung Digital City are less extensive. Samsung does, however, partner with private research university Sungkyunkwan University in Suwon on several levels (investment in research facilities, investment in the new Samsung Univeristy Library at the campus, offering scholarships to top SKKU students…).
Nevertheless, Samsung C&T plays the major role in the field of South Korean urban development and works on a broad range of projects, from residential, civic infrastructure, governmental and public buildings to plants and commercial buildings. With the support of the government, Samsung C&T has constructed 217,000 dwellings in South Korea since 1980, while 300 Samsung’s specialists are researching the usage of technology in urban infrastructure (Stribos, 2014).
This article was originally published on Corporate Landscapes Magazine.
Bibliography:
Colantonio, A., Burdett, R. and Rode, P. (2013) Transforming Urban Economies: Policy Lessons from European and Asian Cities. Abingdon: Routhledge.
Samsung Newsroom (2014) 20 Things You Didn’t Know about Samsung’s Headquarters in Suwon. Available at: https://news.samsung.com/global/purposely-leaked-20-things-about-samsungs-digital-city (Accessed 4 March 2016).
Samsung Village (2014a) A Sneak Peek into Samsung Digital City. Available at: ‘http://www.samsungvillage.com/blog/2014/11/13/sneak-peak-samsung-digital-city/ (Accesed 4 March 2016).
Samsung Village (2014b) Samsung Electronics Opens New R5 Research Institute. Available at: http://www.samsungvillage.com/blog/2013/06/10/samsung-electronics-opens-new-r5-research-institute/ (Accessed 4 March 2016).
Stribos, T. (2014) COMMERCIAL URBANISM: Samsung’s Venture into the World Economy. Available at: https://atlantistudelft.wordpress.com/2014/12/16/commercial-urbanism-samsungs-venture-into-the-world-economy/ (Accessed 4 March 2016).