Sam­sung pro­motes Scions as found­ing fam­ily tight­ens grip

The Pak Banker - - Company& -

SEOUL: Sam­sung Elec­tron­ics Co., the world's largest maker of tele­vi­sions and flat screens, pro­moted the chair­man's son to pres­i­dent as the found­ing fam­ily tight­ens its grip on South Korea's biggest in­dus­trial group.

Lee Jae Yong, 42, will re­port to Chief Ex­ec­u­tive Of­fi­cer Choi Gee Sung, Sam­sung Group said in a state­ment to­day. His sis­ter, Lee Boojin, 40, was named pres­i­dent of Sam­sung Ever­land Inc., chief ex­ec­u­tive of­fi­cer of af­fil­i­ate Ho­tel Shilla Co. and ad­viser to Sam­sung C&T Corp.

The pro­mo­tions pave the way for Lee and his sis­ter to prove their abil­ity to lead a group of nearly 70 com­pa­nies gen­er­at­ing an­nual sales of about $200 bil­lion. The move also high­lights the re­silience of the fam­ily-run "chae­bol" busi­ness model, which has spear­headed South Korea's in­dus­tri­al­iza­tion since the 1960s and been blamed by the In­ter­na­tional Mon­e­tary Fund for push­ing the coun­try into fi­nan­cial cri­sis in 1997.

"We re­ally don't know what goes on in terms of gov­er­nance at Sam­sung be­cause there's so much done be­hind closed doors," said Tom Coyner, who helps ad­vise for­eign in­vestors in South Korea as pres­i­dent of Soft Land­ing Con­sult­ing Ltd. in Seoul. "The re­sults to a large ex­tent speak for them­selves."

Sam­sung Elec­tron­ics, the group's flag­ship unit, rose 4 per­cent to 893,000 won as of 2:43 p.m., while the bench­mark Kospi in­dex rose 0.2 per­cent.

Sam­sung Group's 67 af­fil­i­ates gen­er­ated 220 tril­lion won ($193 bil­lion) in sales last year, equiv­a­lent to a fifth of South Korea's gross do­mes­tic prod­uct, ac­cord­ing to fig­ures from the Fair Trade Com­mis­sion and the Bank of Korea.

Sam­sung Elec­tron­ics CEO Choi will also be vice chair­man, ac­cord­ing to the state­ment. Sam­sung Mo­bile Dis­play CEO Kang Ho­moon was named vice chair­man of Sam­sung China Head­quar­ters and will be re­placed by the head of the head of Sam­sung Elec­tron­ics's me­mory-chip busi­ness.

Park Sang Jin, head of the dig­i­tal imag­ing di­vi­sion at Sam­sung Elec­tron­ics, was named CEO of Sam­sung SDI Co., re­plac­ing Choi Chi­hun, who will be­come CEO of Sam­sung Card Co.

Lee Jae Yong, who stud­ied at Har­vard Busi­ness School and Ja­pan's Keio Uni­ver­sity, joined Sam­sung Elec­tron­ics in 1991. His roles in the com­pany have in­cluded be­ing the chief cus­tomer of­fi­cer and vice pres­i­dent at the strate­gic plan­ning di­vi­sion. He was pro­moted to ex­ec­u­tive vice pres­i­dent and chief op­er­at­ing of­fi­cer in De­cem­ber 2009.

"There are no real achieve­ments that show off his man­age­ment skills," said Lee Jin Woo, a fund man­ager at KTB As­set Man­age­ment in Seoul. "As long as he can show he's ca­pa­ble, fam­ily man­age­ment won't be an is­sue."

Sam­sung said that as COO, Lee has strength­ened re­la­tion­ships with key global cus­tomers and busi­ness part­ners and helped so­lid­ify Sam­sung's chip and dis­play busi­nesses by lead­ing pre­emp­tive busi­ness in­vest­ments.

"He is ex­pected to con­tinue to strengthen the com­petive­ness of Sam­sung's strate­gic busi­nesses and to lay the foun­da­tion for Sam­sung's fu­ture new growth busi­nesses," ac­cord­ing to the state­ment.

His sis­ter is cred­ited with play­ing a "piv­otal" role in im­prov­ing prof­itabil­ity at Ho­tel Shilla and Sam­sung Ever­land, ac­cord­ing to Sam­sung.

Un­der their fa­ther Lee Kun-Hee, who's led the group since he took over from his fa­ther in 1987, Sam­sung Elec­tron­ics shares have jumped more than 70-fold, sur­pass­ing the mar­ket val­ues of Hewlett-Packard Co., Sony Corp. and Texas In­stru­ments Inc. The chair­man re­turned to Sam­sung af­ter he re­ceived a pres­i­den­tial par­don over a con­vic­tion of tax evasion so he could help Korea's bid to host the 2018 Win­ter Olympics. -Bloomberg

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