In the United States, Samsung (KRX: 005930) is known primarily as a producer of consumer electronics ranging from smartphones to TVs, computers, and home appliances (its prime competitor being Apple [NASDAQ: AAPL]). Samsung also provides insurance, produces industrial machinery (Samsung Heavy Industries) and manufactures cars (Samsung Motors).

However, within South Korea, the company is even more pervasive.  As a "chaebol", Samsung is one of the large, family-controlled conglomerates that hold enormous sway over both the country's economy and its political sphere. Samsung owns medical centers, has built apartment complexes, maintains the affiliated Sungkyunkwan University, and even owns funeral parlors. Its electronics and appliances are ubiquitous in consumer's daily lives.

© Samsung Newsroom / Flickr

Samsung was founded in 1938 by Lee Byung-chul in Daegu, South Korea, as a dried fish and flour exporter (most of its products were sold to China). It later transitioned to become a life insurance and textile company, but finally hit its stride in the electronics sector in 1969 when it began to produce black-and-white televisions. This product's success spurred the company to develop and promote more electronics, and gave it a significant hold in the American market via exports. Today, Samsung and its affiliated companies comprise over 20% of the Korean Stock Exchange's entire market value, and 15% of South Korea's entire economy. The company also serves as a valued symbol for South Korea's ascension in the decades following World War II, during which the country's economy transformed from one of the world's poorest economies to one of the world's richest. As a result, many citizens of South Korea still hold chaebol in high esteem, despite chaebols' close and often illegal ties to the country's political elite.

© Sagase48 / Shutterstock.com

However, this public regard has been shaken by the recent arrest of Samsung's CEO, Jay Y. Lee. The Vice Chairman of Samsung Electronics Co. has been accused of "donating" approximately $36 million to a controversial confidant of President Park Geun-hye (Samsung has denied any accusations of wrongdoing). The "donations" were presumably given to gain administrative approval for a merger of two Samsung affiliates, which would have consolidated the Vice Chair's control within the company. In response to the accusations, hundreds of thousands of protestors flood the streets in South Korea, causing lawmakers to vote to impeach President Park Geun-hye.

However, whether this scandal will spur reform amongst the chaebol is not certain. President Park Geun-hye, like her predecessors, argued that the chaebol were too valuable to the economic wellbeing of the nation to be subject to strict legal penalties. High-ranking chaebol offenders (including the chairman of Samsung, Lee Kun-Hee) have historically received pardons and suspended sentences for their transgressions. As a result of the chaebol's domination of the Korean economy, small and medium-sized companies (which employ the vast majority of Korean citizens) are held back by a lack of access to technology, capital, and fair-trade regulation.

© Samsung Newsroom / Flickr

Samsung's image was inarguably damaged after its Galaxy Note 7 phone became internationally known for spontaneously catching fire (the problem was later identified to be the phone's battery). The arrest of the company's CEO, in conjunction with the impeachment of President Park Geun-hye, is likely to hurt the company's reputation even further. However, Samsung's future remains bright: in 2016, the company became the world's leader in the virtual reality market (70% of all virtual reality devices shipped around the world were manufactured by Samsung). The South Korean government has announced that it plans to become an international powerhouse in the VR sector, which only continues to grow as technology advances. Doing so will undoubtedly lead to more government support for Samsung and its initiatives, despite the company's current legal and public image complications.