South Koreans Dismayed Over Samsung Note 7 Crisis
Samsung Electronics, a subsidiary of the Korean conglomerate Samsung Group, discontinued its flagship “phablet,” Galaxy Note 7, on October 11, 70 days after the official release. The ill-fated iPhone challenger suffered from severe overheating problems, resulting in numerous explosions even after a September recall. To many South Koreans, the crisis felt real and personal. The initially highly acclaimed phone debuted in the beginning of August, breaking a pre-order record in South Korea with its beautiful design and cutting-edge display features. Nonetheless, some customers soon discovered overheating problems with their phones. Stories of Note 7 phones catching fire went viral on the internet, with one video receiving almost four million views. Samsung suspected that defective batteries were the root cause of the problem and recalled the model for the first time in September. Some replacement phones, however, continued to exhibit overheating problems. Meanwhile, the Federal Aviation Administration (FAA) and its counterparts worldwide started to impose strict regulations on the use of Note 7 on airlines, eventually leading to a complete ban of the phones. Under immense pressure from both consumers and governments, Samsung finally decided to stop this product line.
Samsung is much more than the world’s largest cellphone manufacturer. In South Korea, the company dabbles in almost any industry imaginable. It operates in the hotels, textiles, insurance, fashion, cosmetics, construction and engineering, household appliance manufacturing, etc. To say the least, Samsung and its products encompass ordinary Koreans’ lives. In fact, Samsung’s revenue accounts for 20 percent of South Korea’s GDP. The fluctuations of Samsung’s performance bring tangible and direct changes to the South Korean economy.
South Koreans have mixed feelings about Samsung. Some are skeptical of Samsung’s political maneuverings and its business model of knocking out capital-starved competitors. Nevertheless, when it comes to the Note 7 crisis, it is not atypical for Samsung skeptics to feel hurt and ashamed. Kim Jeong-min, a former South Korean teacher, told The New York Times that “Samsung is to the global market what our national team is in the Olympics.” Kim Sang-jo, a professor of economics at Hansung University in Seoul, echoed Kim Jeong-min’s view, saying that “South Koreans are embarrassed by this crisis, because they see Samsung as representative of Korea.”
Analysts estimate that discontinuation of the Note 7 could lead to more than $150 billion in losses and forgone sales. Meanwhile, Samsung may have to face a more costly loss in its reputation. Although production of the phone officially ended earlier this month, the Note 7 drama has just started. In South Korea, more than 500 clients took Samsung to the court, requesting compensation for time, money, and “psychological shock.” In the United States, apart from existing individual cases, Samsung is now facing a potential class action lawsuit.
Samsung is rich and powerful enough to afford one Note 7 crisis. But it has to learn from this expensive lesson. In the smartphone world at least, Apple and the Chinese companies, such as Huawei and Xiaomi, are more than ready to seize the market.
