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Lee Kun-hee: 'Hermit philosopher' took Samsung to the global stage

Late chairman engineered rise of South Korea's top conglomerate

Samsung Chairman Lee Kun-hee in Frankfurt, Germany, in 1993. Lee told executives to change everything but their wives and children in order to take the group to the next level.

SEOUL -- Samsung Electronics Chairman Lee Kun-hee, who died Sunday, famously avoided the public eye and often preferred to stay home to contemplate the future of the group over going into the office. But he was also no stranger to drastic action, like burning defective phones in a bonfire, which helped propel the South Korean company into a global giant in a generation.

Lee took over Samsung's reins in 1987, following the death of his father and group founder Lee Byung-chull. Samsung by then was already one of South Korea's biggest chaebols, or family-owned conglomerates. But the company lacked substance in Lee Kun-hee's eyes.

Samsung Electronics' operations at the time were centered around household appliances. Quality control often took a back seat to the company's push for scale, and factory workers apparently would sometimes trim defective parts by hand with a utility knife to make them fit into the products.

Concerned the company was headed for doom, Lee gathered his executives in Frankfurt, Germany, in 1993 to show them a video of such slipshod practices on the factory floor. "Change everything other than your wives and children," he told them.

This was the turning point for Samsung's shift toward quality over quantity. When one of its mobile phones was found to be defective back in the 1990s, Lee famously recalled the entire inventory and set them on fire.

"A hermit philosopher -- that's exactly what he was," said one of Lee's former aides at Samsung.

Lee entrusted Samsung's day-to-day operations to professional managers, and instead focused on the kinds of big decisions that could sway the group's fate. He almost never appeared in public and rarely even went into the office. Rather, he would bury himself in books and magazines at home and contemplate the future of Samsung. He would hand copies of books he was particularly impressed by to other executives as a way to share his concerns about the company.

Silent but highly charismatic, Lee appeared to see right through to the heart of any issue. He kept the company's executives and employees on their toes, leading to a corporate culture of double- and triple-checking everything to ensure a stamp of approval from the big boss.

Lee spent a lot of time in Japan, having attended Waseda University in Tokyo. He kept in close touch with his school friends and business leaders in the country, and was known for his interest not only in Japan's technology, but its economic development.

While Lee led Samsung through many triumphs, such as becoming the world's largest memory maker, he suffered his fair share of setbacks as well. For example, the group partnered with Nissan Motor to launch its own automaker in 1995, fulfilling one of Lee's key business aspirations. But the Asian financial crisis hit in 1997, forcing Samsung to ultimately sell the unit to Renault in 2000.

As the head of South Korea's biggest conglomerate, his every move came under public scrutiny. He was also under constant pressure for reform from the government and from advocacy groups.

He temporarily stepped down as chairman after being convicted in 2008 over how he passed the business down to his son, Samsung Electronics Vice Chair Lee Jae-yong. The younger Lee is still in court over how he came to be in charge of the conglomerate, and he announced in May that he will not be handing the business down to his children.

Lee Kun-hee continued to warn against complacency within Samsung and in the greater South Korean economy until suffering a heart attack in 2014. "We used to have more advanced businesses guiding us like a lighthouse, but from now on, we need to sail through the open oceans on our own," he once said.

Lee Jae-yong now faces the daunting task of carrying on his father's legacy. He has already been acting as the group's de facto leader for some time, so many expect a limited impact on Samsung's operations from the elder Lee's death. But the late chairman owned 4.18% of Samsung Electronics, and was a shareholder in other units like Samsung C&T and Samsung Life Insurance that also own shares in the flagship company. There is speculation that the group could go through some major restructuring to fund the steep inheritance taxes likely to be involved.

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