ELECTRONICS INDUSTRY IN ASIA Research Paper Series No 3

In the Belly of the Beast: Samsung Electronics Supply Chain and Workforce in South Korea
Jiwon Han, Wol-san Liem, and Yoomi Lee Research Institute for Alternative Workers Movements, South Korea

In the Belly of the Beast: Samsung Electronics Supply Chain and Workforce in South Korea

 2013 Asia Monitor Resource Centre Asia Monitor Resource Centre Flat 7, 9/F, Block A Fuk Keung Industrial Building 66-68 Tong Mi Road Kowloon Hong Kong Tel: (852) 2332-1346 Fax: (852) 2835-5319 Website: www.amrc.org.hk The paper may be reproduced in any non-profit publications; credit is requested. In the Belly of the Beast: Samsung Electronics Supply Chain and Workforce in South Korea By Jiwon Han, Wol-san Liem, and Yoomi Lee (Research Institute for Alternative Workers Movements) February 2013 Edited by Asia Monitor Resource Centre

Research team: Jiwon Han, Wol-san Liem, and Yoomi Lee The Research Institute for Alternative Workers Movements (RIAWM), Seoul, South Korea, was established in 2010 to contribute to the revitalization of the workers movement in South Korea and beyond. RIAWM is working to critically analyse the conditions workers face amidst the structural crisis of capitalism, and develop concrete policy for workers movement that both improves workers lives and strives towards an alternative political-economic system. RIAWM is affiliated to the social movement organization Peoples Solidarity for Social Progress, founded in 1998. Website: http://www.awm.or.kr and http://www.pssp.org

The Asia Monitor Resource Centre is an independent non -governmental organization focusing on Asian labour concerns. The Centre provides information, research, publications, training, labour networking and related services to trade unions, labour groups, and other development NGOs in the region. The Centres main goal is the support democratic and independent labour movements in Asia. In order to achieve this goal, AMRC upholds the principles of workers empowerment and gender consciousness, and follows a participatory framework. www.amrc.org.hk.

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In the Belly of the Beast: Samsung Electronics Supply Chain and Workforce in South Korea
Jiwon Han, Wol-san Liem, and Yoomi Lee Research Institute for Alternative Workers Movements
Abstract This paper discusses Samsung Electronics importance to the South Korea economy, its ownership structure and its system of supply and production. It centres on an in -depth analysis of the organization of Samsung Electronics supply chain, assessing the electronics giants specific relationship to the companies that compose each layer of this complex system. It focuses on the domestic South Korean supply chain, but makes references to overseas production sites and suppliers. Through this analysis, the report demonstrates Samsung Electronics almost absolute dominance of the South Korean electronics industry and the meaning of this dominance for less influential companies and their workers. The paper also discusses the no union policy of Samsung Electronics and its parent company, Samsung Group and the way this policy combines with the organization of the supply chain to enable production flexibility and maximum profits for Samsung, while keeping downward pressure on wages at most points in the supply chain. Finally, the report assesses various current efforts to organize Samsung workers, and argues that the time is now ripe to carry out a full -blown campaign for their health and labour rights.

I. Samsung Electronics: An Introduction Samsung Electronics. Consumers know it well, yearning to purchase its products, which they experience as a single brand. In fact, Samsung Electronics is not that simple and it is incorrect to see it as a single company/brand. Samsung Electronics is the flagship company of Samsung Group, which is composed of 516 companies worldwide. Of these companies 195 are full Diagram 1: Samsung Group Structure

-fledged Samsung Electronics subsidiaries, meaning they are incorporated entities of which Samsung Electronics owns more than a 50 percent share. In addition, Samsung Electronics controls a further 63 companies which make components for the subsidiaries, although it does not own a majority share in them. The mobile phones, televisions and all 264 products under the Samsung Electronics brand are produced and sold through Samsung Groups network. 1. Ownership Structure

The ownership structure of these 500 plus companies is formed through a complex web of circular investments. This structure, which makes it possible for an investor to control an entire company without directly owning as much as a 10 percent share, characterizes Korean chaebols (conglomerates), including Samsung. The group is in fact a representative case, in which the owner is able to control the entire group, despite not having only a majority share in many of the companies. Lee Kun-hee, chairman of Samsung Group, and his family own only a 2 percent share in Samsung Electronics directly. They are nonetheless able to

Sources: Samsung Electronics, Samsung SDS, and Samsung Display Annual Reports

In the Belly of the Beast: Samsung Electronics Supply Chain and Workforce in South Korea

Diagram 2: Samsung Group Ownership Structure

2. Revenue, profit, main products

6% 35%

Samsung Electronics

In 2012, Samsung Electronics and its 195 direct subsidiaries recorded revenue of KRW 201 trillion and operating profit of KRW 29 trillion. This represents an increase in revenue of 66 percent and in operating profit of 383 percent over the past five 1% years. Samsung Electronics has been one of the fasting growing companies in the world since the onset of the global financial crisis in 2008-2009. In the midst of the crisis, the group was able to 5% push Japanese companies out of the display Samsung C&T market. It also pushed Nokia out of the mobile phone market, and now share market dominance with Apple. The fact that after 2008, more than half of Samsung Electronics operating profit has 7% been made from smart phone sales demonstrates the sudden growth in this segment. Samsung Electronics and its subsidiaries account for roughly 85 percent of Samsung Groups total operating profit of roughly KRW 35 trillion. This is because firstly, Samsung Electronics transactions with other electronics subsidiaries, including Samsung Display, Samsung SDI and Samsung Electric, are conducted in a manner that is favorable to the former, and secondly, Samsung Groups finance subsidiaries, such as Samsung Life and Samsung Card, have been unable to considerably increase their profits due to domestic economic stagnation. Samsung Electronics four principle divisions use self-supporting accounting systems, meaning that they independently calculate revenue and profit. These four divisions are Consumer Electronics (CE), IT & Mobile Communications (IM), Semicon-

Sources: Samsung Electronics, Everland, Samsung Card, Samsung C&T, and Samsung Life Annual Reports

control Samsung Electronics because of the circular equity structure of Samsung Everland, Samsung Life, Samsung C& T and Samsung Card. The total shares in these companies held by Lee and his family are worth roughly KRW 11 trillion (roughly US$11 billion) and as such amounted to only 2 percent of Samsung Groups total market value (KRW 338 trillion) at the end of 2012. Nonetheless, Lee and his family exercise absolute management authority over the Samsung Group. This circular investment structure found in South Korean chaebols, which allows this sort of control, is currently a hotly debated economic issue.

Diagram 3: Revenue and operating profit of Samsung Electronics and its subsidiaries

Source: Samsung Electronics Annual Reports, 2008-2012

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ductors, and Display Panels (DP). Until as late as 2000, semiconductors and LCD panels accounted for more than half of both revenue and profit. After 2008, however, mobile product sales have grown by more than 50 percent each year, such that the mobile telephone division now accounts for almost 60 percent of Samsung Electronics profit.
Table 1: Revenue and market share by division (%) Category Of total revenue Global market share CE 23 22 (TV) IM 55 27 Semiconductor 18 41 (DRAM) DP 14 27 (LCD)

More Samsung Electronics products are produced in China than any other single country. Last year, China Samsung recorded revenue of US$50 billion for the first time. Having recorded US$27.6 billion in 2007 and US$30.8 billion in 2009, China Samsung has demonstrated considerable rapid growth. Diagram 4: China Samsung Factories

Source: Samsung Electronics 2012-4Q Earnings Release

3.

Location of production sites

Samsung Electronics headquarters are located in South Korea. Like other transnational electronics corporations, however, most of its factories are located abroad. The vast majority of products produced in South Korea are not consumer products but semiconductors, LCD panels and other central electronic components. Consumer durables (i.e., home appliances), such as refrigerators, air conditioners and washing machines, are produced in South Korea only to the extent necessary to satisfy domestic demand. Almost all TVs, printers and computers are produced abroad. The majority of mobile phones, which could be said to be Samsung Electronics driving product, are produced in Vietnam and China. Until 2012, semiconductors and LCD panels were produced almost entirely in South Korea. However Samsung Electronics plans to have roughly halve of semiconductor and LCD panel production located in China by 2014~2015.
Table 2: Samsung Electronics main products: Breakdown by production location (%) TVs Domestic Production Main Production Locations 5% Mobile Phones 20 Vietnam China South Korea Memory chips 95 South Korea U.S. China (by 2014) LCDs 95 South Korea Slovakia China (by 2014) Source: MK Business News, 4 April 2012

4. Workforce Samsung Electronics domestic and overseas sub sidiaries together employed some 221,000 workers at of the end of 2011. This is a 53 percent increase from five years ago. With roughly 100,000 workers employed in South Korea and 120,000 employed abroad, the number of overseas employees surpassed domestic employees for the first time in 2011. Roughly 41,000 workers the largest number of employees working in any single country outside of Koreaare employed in China. In the rest of

China Mexico Hungary

Source: Samsung Electronic 2012-3Q Quarterly Report

In the Belly of the Beast: Samsung Electronics Supply Chain and Workforce in South Korea

the Asia region, Samsung Electronics employees number roughly 43,000. Next comes South America with roughly 21,000 employees and Europe with 13,000. Diagram 5: Samsung Electronics global employees

Korea are independent of Samsung Electronics. The majority of these are LG Electronics subcontractors. The system of component production and supply for Samsung Electronics is made up of five layers. The first layer is composed of Samsung Group subsidiaries and accounts for roughly 11 percent of the value of components purchased by Samsung Electronics. The second layer is made up of transnational electronics component suppliers who have independent technical capability. The American companies Qualcomm, which has a CDMA patent, and 3Com, which has a wireless patent, are examples of companies in this layer. The third layer comprises suppliers to which Samsung Electronics outsources parts production that it could produce itself, but chooses not to for cost or production capacity reasons. These companies principally supply small-scale LCD panels. Samsung Electronics gets these low-price LCD panels from companies such as the Taiwan-owned AU Optronics Corp (AUO) and Chunghwa Picture Tubes Ltd (CPT). The fourth layer is composed of domestic subcontractors that supply parts that Samsung Electronics could not produce itself. The main companies in this layer include Intops LED Company Ltd, which handles both the production of mobile phone cases and the assembly of mobile phones, and Interflex Company Ltd, which produces printed circuit boards (PCBs). The final layer in the supply chain is composed of small and medium-size parts suppliers located in industrial parks. As these companies supply low cost parts, Samsung Electronics frequently switches among them, exacerbating price competition. It also imports some parts from China. These are the companies most exploited by Samsung Electronics. Suppliers relationships and negotiating power with Samsung Electronics vary dramatically depending on to which layer of the supply chain the supplier belong. The Samsung Group subsidiaries that supply the main components and make up the first layer, for instance, receive the protection of the Group. Legally, they are separate companies, but in fact they operate as if they were part of the same company based on Samsung Electronics business plan. Transnational corporations that possess patents have strategic partnerships with Samsung Electronics due to the scale and importance of their contribution to the production process.

Source: Samsung Electronics Sustainability Report, 2012

Diagram 6: Samsung Electronics, Employment by Region

II. Samsung Electronics Domestic Supply Chain Samsung Electronics revenue equals roughly 20 percent of the value of South Koreas GDP. In addition, to say that Samsung Electronics and its subcontractors are South Koreas electronics industry would not be an exaggeration. Only roughly 30 percent of all electronics companies in South

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Diagram 7: Layers in Samsung Electronics supply chain and their importance

Irreplaceable

hardly even be seen as contractual. These companies contracts with Samsung Electronics may be on a monthly or even weekly basis, and they must supply at the prices Samsung Electronics determines. Their owners treated even more poorly than a low-level Samsung Electronics procurement department employee. III. Samsung Electronics Workers

Negotiating power gets progressively weaker

1. No Union Policy
Depending on quality and internal business decisions, may be

Can be replaced at any time

Samsung Electronics is known in South Korea for its faithful adherence to a no union policy. From the time of Samsungs founder, Lee Byung -chull, to the current leadership of Lee Kun-hee, Samsung used any and all means to stop employees from forming unions. This policy has affected not only Samsung Electronics, but the entire electronics industry. This is because Samsung Electronics intervenes actively to prevent the formation of unions at its suppliers. The effectiveness of Samsung Electronics no union policy is evident in the fact that union participation in the South Korean electronics industry is only roughly 3 percent. This figure includes the members of the LG Electronics union, which is affiliated with the Federation of Korean Trade Unions (KFTU) and is a true-blooded company union. Excluding the LG union, less than one percent of all workers in the electronics industry are union members; there are only 300 union members in all the 70 percent of electronics companies that make up Samsung Electronics supply chain. At the center of Samsung Electronics no union strategy are careful workplace control and a thorough system of selective inclusion and exclusion. The diagram 8 below demonstrates the supply chain into which a small supplier of mobile phone side keys located in the Sihwa Industrial Park would be embedded. The component produced by this 4th or 5th tier supplier must be passed on, first, to companies producing lowerlevel modules, then to an EMS company before finally reaching Samsung Electronics.

Unlike the companies in the first and second layer, which are irreplaceable from Samsung Electronics point of view, domestic third and fourth -tier vendors or overseas parts suppliers may lose their contracts with Samsung Electronics at any time if there is a problem with product quality or supply. Samsung Electronics will at times support domestic vendors, but it will also easily cut those that it deems to have lost value from a business perspective. In the case of small and medium -size suppliers located in industrial parks, the relationship can MOBILE PHONE SUPPLY CHAIN HIERACHY

The supply chain runs 5 to 7 layers deep, with Samsung Electronics controlling the entire process from development to final assembly. Turnover rates for products are very fast and the volume of production varies greatly depending on the model. These variations are dealt with by contracting final assembly to electronics manufacturing services (EMS),

contractors specializing in this area. There are modules for most parts produced by first and second tier subcontractors. The main components that go into each module are produced by Samsung Electronics subsidiaries or imported from overseas. Simple parts that do not require a high-level of technology are produced by the 3rd through 5th tier subcontractors concentrated in industrial parks.

In the Belly of the Beast: Samsung Electronics Supply Chain and Workforce in South Korea

Table 4: Union presence in the South Korean electronics industry Category Total workers in electronics industry Union membership Union presence Union membership at Samsung Electronics suppliers Number/Content 430,000 15,000 (KCTU 1,200) 3.5% (Total Density 9%) 300

municate with point people stationed in each company department. Similarly, the labor management department supervisor communicates with a point person in each company division. The head of the department appoints and communicates with one point person for every two divisions. These point people continuously monitor employees attitudes and actions, taking stock of informal gatherings on a regular basis (Don -mun Jo, Samsung Groups Labor Control and Panpticon, 2007). 2. Wages

Source: Jiwon Han, Production, Supply-chain, and Working Conditions in the Korean Electronics Industry, Research Institute for Alternative Workers Movements, 2011.

At Samsung Electronics, the labour management department monitors each individual worker closely. For example, when a few Samsung SDI workers started to form a union in 2000, the management issued orders for all of them to be dispatched overseas. Those who refused the order were dismissed for disciplinary reasons. At the same time, Samsung SDI tapped workers phones, followed them, approached their families with threats and appeasements, and even put location tracking devices in the mobile phones that the workers themselves made. Similar cases have occurred several times over the last ten years, for example, at Samsung Aceone and Samsung Electronics Suwon factory in 2004, at Samsung SDI in 2005 and at Samsung Everland in 2011. The strength of Samsung Electronics labour management system makes it possible to prevent the formation of unions almost from the get-go. Samsung Electronics uses a point person system to monitor movements towards union formation on a day-to-day basis. Staff in the labour management department communicate appoint and com-

If this form of control is one side of union repression, the other side is the use of appeasement and rewards for loyalty. In exchange for not forming unions, Samsung Electronics provides its workers with the highest wages in the industry. The average monthly wage of workers directly employed by Samsung Electronics was 5.77 million won as of April 2012. This was 68 percent more than the average wage of the entire electronics industry during the same period. Even when compared to the average for all workers at companies with 300 or
Table 5: Wages in electronics industry (million Korean won) Electronics Industry Average Monthly Wage 3.44 Small/ mediumsize companies 2.67 Large companies 3.90 Samsung Electronics 5.77

Sources: Samsung Electronics, Quarterly Report, 2012-3Q, Ministry of Employment and Labor, Industrial Labor Power Survey, April 2012.

Diagram 8: Mobile phone assembly

Source: Basic analysis of the KIET Industry, Hana Institute of Finance, 2009

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more workers, the Samsung Electronics average wage was considerably higher. If the yearend bonus, based on the years results - which is more than 10 million won-- is included, the difference is even greater. Samsung Electronics is able to provide its employees such high wages because of its ruthless exploitation of its subcontractors, a practice enabled by its no union policy. By applying its no union policy to the entire electronics industry, which it effectively controls, Samsung Electronics is able to keep the wages of the majority of electronics workers down to the legal minimum. At KRW 3.44 million, the industry average appears fairly high. (See Table 5 above.) The average is high, however, because large companies, like Samsung Electronics and LG Electronics, are included in the calculation. At KRW 2.67 million, the average monthly wage at small and medium-sized companies, which make up 90 percent of all Korean electronics companies, does not even equal half of the Samsung Electronics average. It should also be noted that managers salaries are included in the calculation of the average wage for these companies. If managers are excluded, it can be seen that the majority of production workers make less than KRW 2 million per month. Samsung production workers, who have roughly the same skill level as other electronics workers, make an average monthly wage of KRW 4.46 million. (The figure of KRW 5.77 million in the table above includes Samsung managers.) If the electronics industry is compared with the automobile industry, where union membership is high, it is easy to see the effectiveness of Samsungs no union policy in keeping wages down. The majority of workers in 1 st tier vendors in the

auto industry are organized. The result is that, while there is a small difference in wages as one goes down the supply chain, a relatively high wage level is maintained throughout the industry. In comparison, all workers in the electronics supply chain, except those employed directly by Samsung Electronics (or LG Electronics) receive the minimum wage. Workers employed at first tier vendors in the automobile industry, who supply Hyundai Motor, make about 80 percent of what Hyundai employees earn. In the case of Samsung Electronics, employees of 1st tier vendors make only about 50 percent as much as Samsung Electronics employees. The lack of unions among 1st tier vendors keeps wages down in these companies and throughout the industry. As such, Samsung Electronics is able to offer its direct employees wages that are well above the industry average, dissipating inclinations towards union organizing. Of course, while Samsung Electronics employees gain materially
Table 6: Comparison of monthly wages in the electronics and auto industries Electronics (estimate) Top of Supply Chain (Samsung Electronics/Hyundai Motor) 1st Tier Vendors 2nd Tier Vendors Automobiles (estimate) KRW 6 million KRW 5 million KRW 2 million

KRW 4 million

KRW 2 million KRW 1.5 million

Source: Ministry of Employment and Labor, Industrial Labor Power Survey, 2012.4

The main components are produced by overseas companies and Samsung subsidiaries. The parts that go into a mobile phone are many and diverse, ranging from the main components such as the system semiconductor, known as the baseband, to the plastic casting, which requires only simple operations to manufacture. Imported from overseas companies are components such as the baseband chip which enables CDMA Com-

munications; the RF receiver/ transceiver which processes wireless signals; the wireless communications chip which makes possible wireless connection; and the indium tin oxide (ITO) film which is the main sensor in touch screens.. Samsungs subsidiaries produce the LCD panel which enables display functions; the flash memory which makes possible data storage; the camera sensor which enables the main functions

of the camera; and the battery cell, the main component of the battery. The multimedia chip, which handles the many noncommunication functions, and the DMB chip which processes DMB broadcast signals, are produced by Samsung Electronics or designed by professional semiconductor design companies and manufactured by foundry companies. The companies that bring together the main compo

In the Belly of the Beast: Samsung Electronics Supply Chain and Workforce in South Korea

from this strategy, the majority of workers in the industry are excluded from these benefits. In addition to controlling wages, Samsung Electronics is also able to maintain a high level of production flexibility due to its no union policy. Samsung Electronics freely increases and decreases the volume of orders placed with suppliers, depending on its business needs. In the case of the auto industries, workers have been able to secure a certain wage level irrespective of production volume through collective bargaining agreements. In the electronics industry, however, where the basic wage is at the legal minimum, if Samsung Electronics does not place orders, workers very livelihoods are put at risk. According to the Ministry of Employment and Labour study cited above workers can work anywhere between 150 and 330 hours a month at a 1st tier Samsung Electronics vendor that manufactures mobile phone cases. During months when orders were down ad workers at this company worked only 150 hours they made a minimum wage of KRW 900,000. In months when they worked 330 hours, however, their wages rose to KRW 2.3 million that is KRW 920,000 in basic wages and KRW 1.4 million in bonuses. With wages fluctuating this greatly, workers at subcontractors must do whatever Samsung Electronics demands to ensure that the orders keep coming in. They cannot even dream of forming a union. This is the result of Samsung Electronics production strategy, in combination with its no union policy, which makes it possible to maintain low wages and at the same time secure great production flexibility.

3. Employment Structure The dual wage structure of the electronics industry means that there is also a dual employment structure. In order to prevent union formation, Samsung Electronics makes it a point of employing young female workers in production jobs. Rather than carry out open recruitment, Samsung Electronics does most of its recruiting for new employees through girls high schools. According to interviews conducted by Support for Health and Rights of People in Semiconductor Industry (SHARPs), a coalition working to improve occupational safety and health in the electronics industry, young women join the company in their late teens and early twenties, work for roughly seven years and then quit when they get married. While the wages these women earn are relatively high, the fact that they are young and female makes them easy to control, and Samsung Electronics uses this to force long hours and high work intensity. It then pressures them to quit once they are older. Of course this is not a formal rule, but rather a secret company practices. In contrast to direct Samsung Electronics employees, the majority of workers at subcontracting factories are women in their forties or older. It is believed that the women workers are better suited to electronics component production than men, and subcontractors prefer older women whom they can pay lower wages to, either because they are only supplementing a family income or they live alone. It is common for such workers to work two or three years for one company before trying to move to a larger one. Because there is no wage increase based on work experience, there is no reason to stay in one place

Diagram 9: Hierarchy of Mobile Phone Supply Chain

Sources: Business reports of each listed company; and Basic analysis of the KIET Industry, Hana Institute of Finance, 2009

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for long. In addition, because the skill level required for work in these companies is not high, it is easy for employers to find new hires. In addition, Samsung Electronics uses a large number of in-house subcontracted workers within its
Table 7: Number of Employees, Samsung Electronics and In-house Subcontractors Direct employees Gumi Factory Suwon Factory Giheung Factory Cheonan Factory Onyang Factory Tangjeong Factory Gwangju Factory Total Number of Inhouse subcontractors 0 22 21 6 4 9 5 67 Number of Inhouse subcontracted workers 0 1,131 3,018 794 440 2,178 671 8,232 Inhouse subcontracted workers (%) 0 4% 121% 13% 8% 17% 19% 12%

the use of temporary agency workers in the manufacturing sector is not permitted. Legal cases have found, moreover, that in-house subcontractors are often actually no more than employment agencies, dispatching temp workers who are managed directly by the parent companys supervisors. Despite several court rulings confirming the illegality of these practices, Hyundai Motor and other manufacturing chaebols continue to employ in-house subcontracted workers. The same is true for Samsung Electronics. According to a Ministry of Employment and Labor survey conducted in 2010, roughly 12 percent of the workers at Samsung Electronics factories, some 8,000 workers, were employed through in-house subcontractors. IV. Conclusion: The Struggle for workers health rights and freedom of association Activism by Samsung Electronics workers has taken two tracks in South Korea: firstly, the struggle for workers health rights and secondly, the struggle for the right to freedom of association. 1. Occupational health and safety In the last several years, dozens of cases of occupational illness have been discovered among workers employed by Samsung Electronics and its subsidiaries. Several civil society organizations have taken up these workers cause, advocating industrial accident insurance coverage and supporting the families of victims. The work of these groups has made the health rights of Samsung Electronics workers a national issue. In recent months, 145 cases of serious occupational illness have been reported at Samsung Electron-

9,357 28,061 2,500 6,246 5,248 13,000 3,492 67,904

Source: Ministry of Employment and Labor, Statistics on In -House Subcontractors (300 plus employees), 2010.

own factories in order to maintain labor flexibility. This is despite the fact, that the use of in -house subcontracted workers in the electronics industry can be seen as illegal. Under South Korean law,

nents and assembly them as modules include the Samsung subsidiaries that produce main parts, small and medium-size companies that have their own technical capacity and small and medium -sized companies that do simple assembly. EMS companies are becoming increasingly more important to Samsung Electronics and in the electronics industry in general. The relationship between these companies, which be-

gan as case manufacturers and mobile set manufactures, has become closer as mobile phone design has come to have greater influence on sales and, therefore, changes more rapidly. In the last few years, set as- sembly, done on consignment as ordered by set companies, as well as case assembly, have become central operations. Samsung Electronics manag- es its relationship with these EMS companies systemati-

cally and, in some cases, even helps them to get listed on the KOSDAQ. EMS companies are involved in the production of roughly 50 percent of the finished products produced domestically. - EMS firms also follow Samsung Electronics abroad. For example, Intops has opened shop in Vietnam and China where Samsung has mobile phone factories. EMS firms are high up in the supply chain hierarchy, but are particularly labour inten-

In the Belly of the Beast: Samsung Electronics Supply Chain and Workforce in South Korea

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Table 8: Victims of occupational illness at Samsung Electronics and subsidiaries (as of June 2012) Company Samsung Electronics Samsung Electronics Samsung Electronics Section Semiconductor LCD Mobile Phone/ Other Samsung Electric Samsung SDI Samsung Techwin Total 12 10 4 145 7 2 0 56 11 7 Cases 91 17 Deaths 32 8

and Lou Gehrigs disease, have also been discovered, as have been psychological disorders such as depression, panic disorder and schizophrenia. These and other mental illnesses result from the fast-paced rigidly controlled working environment at Samsung Electronics worksites (SHARPs, Conditions of Samsung Workers as Demonstrated through a Chain of Deaths and the Struggle against Occupational Illnesses, 2011). In November 2007, a coalition called Support for Health and Rights of People in Semi Conductor Industry (SHARPs) was formed to advocate on behalf of victims of occupational illness at Samsung Electronics. SHARPs has now been active for more than five years and has succeeded in bringing the issue into the public arena. In January 2013, Samsung Electronics notified SHARPs of its intention to meet the leukemia victims and bereaved families and find a solution to the problem through dialogue. The company promised to form an appropriate delegation for the meeting and engage in honest discussion. For the first time in five years, discussions between SHARPs and Samsung Electronics have begun. 2. Efforts at union establishment

Source: Support for Health and Rights of People in Semiconductor Industry (SHARPS).

ics and its subsidiaries. In 56 cases, the individuals involved (mostly young workers in their 20s and 30s) have died. However, the number of Samsung Electronics workers who have passed away or are currently suffering from such illnesses is thought to be much higher. Because of the system of labor control discussed above, even reporting illness is difficult. Of all the illnesses reports, cancers involving the lymphatic system (e.g. leukemia, lymphoma) are the most common. There are many cases, as well, of brain tumors and breast, skin and lung cancer. Illnesses related to the nervous and immune systems, such as multiple sclerosis, multiple neuritis

Recently, efforts to form unions within the Samsung Group have gained public attention. This is due to the fact that the Samsung Labor Union, formed by workers at Samsung Everland in 2011, recently joined the Korean Confederation of Trade Unions-affiliated Korean Metal Workers Union (KMWU) on January 14. The Samsung unions affiliation to the KMWU marks the first time in history that workers employed by Samsung Group have joined a Korean Confederation of Trade Unions-

sive. They employ women workers through labor agencies disguised as in-house subcontractors.

At the very bottom of the supply chain are small and medium-sized parts suppliers located in the Banwol/Sihwa, Guro and Gumi industrial complexes in Korea.

Table 3: Samsung Electronics domestic EMS production (unit: 1000) Samsung Electronics Gumi Factory EMS Intops 29,118 53,483 Pntel 22,913 Chamtech 6,368

For example, in the Banwol/ Sihwa area alone, there are some 700 companies registered as producing PCBs, mobile phone parts and communication equipment as their main products. The majority of these companies employ less than 20 workers and record sales of around KRW 1 billion annually.

Total: 58,399 (52% of Samsung Electronics Domestic Production)

Sources: Business Reports of each listed company

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affiliated union in significant numbers. Everland workers first established a union on July 12, 2011. At the time, however, they did not affiliate to a higher level (industrial) union. Recently, however, workers who had been openly active in the Samsung union joined the KMWU. More workers are expected to join in the near future. Samsung Group has responded to the formation of the Samsung union by meeting out disciplinary measures against its officers. These actions, part of Samsungs no union strategy, have frightened workers, making union activities difficult even for those with complaints against the company. The unions officers chose to affiliate to the powerful KMWU in reaction to workers desire for a stronger defense against Samsung. Now that Samsung Group must deal directly with the KCTUs main industrial union, much interest has turned to the fate of Samsungs no union policy. As an industrial union, the KMWU has bargaining authority overall of its organized worksites. Thus, it is not the enterprise-level union but the KMWU, which is the Samsung Groups bargaining partner. Given the many voices within the labour movement and civil society calling for an end to Samsungs union repression, and recent interest in economic democratization, a keyword for both the liberal and conservative candidates in the 2012 presidential election, the pressure on Samsung to adopt a more just policy is mounting. It is now more important than ever that unions and social organizations engage in media and education campaigns to create the environment in which Samsung workers can public demand their labour rights. The KMWU is currently making plans for a national, long-term and direct organizing campaign that will start with registering more Samsung workers. It is also planning to form a network of activists, professionals and scholars who can put public pressure on Samsung to take a more socially responsible position. The time is right for a real effort to organize for occupational health and safety protection and labour rights of Samsung workers.*** References Samsung Electronics Sources Annual Reports, 2008, 2009, 2010, 2011, 2012

Earning Releases, 2012-4Q Quarterly Report, 2012-3Q Sustainability Report, 2012 Other Annual Reports Everland. 2009, 2010, 2011, 2012 Samsung Card. 2009, 2010, 2011, 2012 Samsung C&T. 2009, 2010, 2011, 2012 Samsung Life. 2009, 2010, 2011, 2012 Statistics Ministry of Employment and Labour, Industrial Labor Power Survey, Seoul (2012) Ministry of Employment and Labour, Statistics on In-House Subcontractors (300 plus employees), Seoul (2010) Statistics Korea, Survey of the Mining and Manufacturing Industries, Seoul (2011) Korea Association for ITC Promotion, Statistics on the Information and Communication Technology Industry Seoul (2012) Ministry of Employment and Labour, Statistics on Union Density, Seoul (2011) Secondary Sources Astill, Katherine and Matthew Griffith, Clean up your Computer: Working Conditions in the Electronics Sector, CAFOD, England and Wales (2005) Bacon, David, Organizing Silicon Valleys High Tech Workers, http://dbacon.igc.org/ Unions/04hitec1.htm (1994) European Metal Workers Federation, Trade Union Recruitment in the ICT Sector, http:// www.emf-fem.org/Industrial-Sectors/ICT/ Policy-papers (2008) Han, Jiwon, Production, Supply-chain, and Working Condition in Korea Electronics Industry, Research Institute for Alternative Workers Movements (2011) Han, Jiwon and Yoomi Lee. Characteristics of Manufacturing Companies in the Seoul Digital Industrial Complex, Research Institute for Alternative Workers Movements, Seoul (2011) Hana Institute of Finance, Basic analysis of the KIET Industry, Seoul (2009) Hoe, Jeong. Another Family Discarded by Samsung, Akaibeu, Seoul (2011). International Metal Workers Federation, Organizing Electronics Workers, http:// www.imfmetal.org/index.cfm?c=23054 (2010)

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