[Editorial] Rebirth of Samsung as Global Conglomerate

Samsung Group Chairman Lee Kun-hee yesterday stepped down after 21 years due to the independent investigation into his conglomerate. The group also announced drastic reform measures: the resignation of Lee, his son Jae-yong and Vice Chairman Lee Hak-soo; dismantling of Samsung’s strategic planning office; and donation of 4.5 trillion won in secret money to charity. The reform plan is more drastic than expected, enough to shock other business groups. As Samsung’s established leadership is dismantled, the group will face a drastic management change.

Certain civic organizations have scoffed at Samsung’s planned reform, saying the nation’s largest group will still be controlled by the Lee family. Reform, however, does not mean that a conglomerate should change either its corporate governance or management succession. Since a corporate owner takes unlimited liability, he cannot separate himself from the firm. Surely, it wasn’t easy for Samsung to accept the resignation of Vice Chairman Lee and leading executive Kim In-joo, who have technically led the group. But their resignations can help the conglomerate renew itself by installing a new leadership. Samsung can also be reborn as a competitive global conglomerate if it discards old practices, grants more independence to subsidiaries, and shows better performance via its drastic reform.

Certainly, Samsung’s stellar performance has instilled confidence into Koreans. The group has also raised the country’s national brand value through research and development and products made with the latest technologies. Nevertheless, it has faced a series of difficulties stemming from its failure to cut its cozy relations with politicians, pursue transparent management, and follow the rule of law.

While Samsung was under independent investigation for bribery and slush funds, the Korean public raised its call for a thorough probe into the group’s corruption. At the same time, however, Koreans are seriously worried over Samsung’s future since the conglomerate holds a large share of the nation’s economy, and that its failure could deal a huge blow. Even smaller firms have urged the government to complete the probe as soon as possible since they want the nation’s top group to contribute to reviving the economy. It is now high time for Samsung to make long-delayed investment and create jobs to compensate the people for their support. Samsung cannot exist without support from the Korean people.

If Samsung wants to earn back recognition from global investors and consumers, it should raise its management transparency and fulfill its social responsibility. Samsung has proven that a technological edge and smart management are not enough to become a world-class company.