Samsung CEO Emerges Amid Business Woes

A rising exchange rate, international oil price hikes, competition from developing countries like China, government pressure for social contributions, and an investigation into Hyundai and Kia Motors, the second largest company in Korea, have made April 2006 a bad month for Korean business.

Against this backdrop, Samsung Group’s Chairman Lee Kun-hee has started to come out of his self-imposed seclusion.

Lee had indirectly led Samsung through vice chairman Lee Hak-soo while keeping silent after scandals regarding phone conversation tapping and illegal presidential funds were publicized. It was confirmed on April 10 that Lee personally ordered the presidents of Samsung affiliates to “prepare for second take-off by responding well to the changing external environments.”

One official from Samsung Group’s Strategy and Planning office announced, “Lee has been briefed by affiliate presidents at the Samsung guest house since the end of March.”

He added that the chairman told the presidents to “prepare for second take-off by acquiring a business system that can respond sensitively to the worsening external business environments.”

It is a very rare thing for the chairman to meet the affiliate presidents in turn to discuss in details the recent problems and to give them orders, as he generally only attended an electronics presidential meeting once a year or so before.

Chairman Lee called in Samsung Electronics Semiconductors president Hwang Chang-gyu on March 27 and was briefed in detail about the prospects and market trend of recent world semiconductors and discussed response measures.

On March 29, Lee held a meeting with presidents of Display and Digital Media. In the meeting president Choi Ji-sung of Digital Media Business, president Lee Sang-wan of Liquid Crystal Display Business, president Kim Soon-taek of Samsung SDI participated and gave reports on the market trend including the restraining movement by Japanese businesses.

Those other presidents of the affiliates who were absent for the meeting are expected to pay visit to Samsung guesthouse within this month.

Financial affiliates such as Samsung Life, Samsung Fire & Marine Insurance, Samsung Card and Samsung Securities will meet at Samsung guest house on the coming May 9 for a dinner party. The presidents of so-called “independent affiliates” such as Samsung Corporation, Samsung Everland, Hotel Shilla and Samsung Petrochemical will directly report to chairman Lee around the end of May.

Affiliate presidents have ordered their Planning and Financial offices to prepare reports in preparation for the upcoming meeting.

One top executive of Samsung’s Strategy and Planning office explained “As chairman Lee did not manage the Group’s problems and issues for nearly two years, he has called in the presidents to examine each issues of interest for each affiliate.”

It is also analyzed that chairman Lee is also trying to discipline the organization which had been a little shaken by Samsung’s apology to the nation and long-term leave abroad through ‘Firsthand Management’ strategy of chairman Lee.

One Samsung official said “There are opinions circulating that some executives and presidents of affiliates have shown lame duck phenomenon as the personnel appointment is coming next year” and added “the chairman has been reported of such opinions.”

Currently more than 60 percent of Samsung Group’s affiliates have presidents that have served for more than the general term which is two or three years, so wide-scale personnel appointment changes are for certain in the next year.

Jeong-Hun Park sunshade@donga.com