Posted on : May.5,2019 18:57 KST
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South Korean President Moon Jae-in shakes hands with Samsung Electronics Vice Chairman Lee Jae-yong at a production plant in Hwaseong, Gyeonggi Province, on Apr. 30. (Blue House photo pool)
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Samsung Electronics vice chairman has aggressively courted the Moon admin. over past year
“There’s something the chair of the Financial Services Commission said I should make a point of telling you. The money going into single building would be enough to build three Incheon Airports.”
On the afternoon of Apr. 30, South Korean President Moon Jae-in was at a construction site at Samsung Electronics’ Hwaseong plant, listening to Jung Eun-seung, company president, explain the equipment going into the building that would house the extreme ultraviolet (EUV) process. Jung had just mentioned that the company had invested more than 20 trillion won (US$17.11 billion) when Vice Chairman Lee Jae-yong, who was standing in the back, interjected to make his comment. When he got to the point about building three Incheon Airports, he held up three fingers at Moon, with a roguish expression on his face.
There was a convivial atmosphere in the air. This was the most relaxed that Lee had looked in any public appearance since he was released from jail on a suspended sentence in February 2018. Most people in the business community think that Lee has gotten his mojo back.
May 1 marked one year since Lee Jae-yong was officially recognized as having become the controlling figure of the Samsung Group. That was when the Fair Trade Commission (FTC) acknowledged that the leadership of the Samsung chaebol had passed from Lee Kun-hee, who still holds the title of “chairman,” to his son, Lee Jae-yong.
The most noticeable aspect of Lee’s behavior over the past year has been his increasing contact with the Blue House and the ruling Democratic Party. This interaction kicked off this past January. In that month alone, Lee held a series of high-flying meetings. One with Prime Minister Lee Nak-yeon at Samsung Electronics’ Suwon plant on Jan. 10, one with Moon at the Blue House on Jan. 15 and one with Democratic Party floor leader Hong Yeong-pyo at the company’s Hwaseong plant on Jan. 30.
Last year, Lee had appeared rigid and nervous, but there’s no evidence of that nervousness today. Many observers have failed to find any signs of anxiety, even though the Supreme Court’s verdict in his case is pending and the prosecutors are investigating his ascension to the Samsung throne. Along with becoming a regular fixture at government events, Lee has also appeared at more than 10 public events both in the country and overseas over the past year. That’s no small number, compared to the other heads of South Korea’s ten largest chaebols.
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Deputy Prime Minister and Minister of Economy and Finance Kim Dong-yeon (right) and Samsung Electronics Vice Chairman Lee Jae-yong shake hands after a meeting at a Samsung semiconductor plant in Pyeongtaek, Gyeonggi Province, on Aug. 6. (Hankyoreh archives)
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Lee’s newfound poise coincides chronologically with the Blue House and the government’s shift toward reliance on expanded investment by the chaebol amid indications that the domestic economy is starting to sputter. And Lee has played along, concocting plans for investment on a grand scale. On Aug. 8, 2018, the Samsung Group announced with great fanfare that it would be investing 180 trillion won (US$153.96 billion) over three years. That was one month after Moon attended the ribbon-cutting ceremony for a new Samsung Electronics’ factory in Noida, India, on July 9, 2018. The latest plan to invest in system semiconductors was announced just six days before Moon’s first visit to one of Samsung Electronics’ domestic factories.
Lee’s approach differs from that of his father, Lee Kun-hee. While on trial for charges of tax evasion and breach of duty, Lee stepped away from his management responsibilities. His trial concluded in August 2009, when the Supreme Court sentenced him to three years in prison, but the sentence was suspended for five years. Lee didn’t return to management until he received a special pardon from then president Lee Myung-bak on Dec. 31 of that year. The following May, Lee unveiled a plan for five major growth industries, including solar cells and automobile batteries. In contrast, the younger Lee has already announced two investment plans while he waits for the Supreme Court’s decision. His surprisingly swift return to business as usual has basically dovetailed with his enthusiastic courting of the political establishment.
Some think Lee isn’t as innovative as his father was
At the same time, some experts think that Samsung’s management isn’t as innovative as it used to be. While Lee publicly announced an investment and employment plan in August 2018, it has yet to have any tangible effect. Lee has attempted to boost his visibility with more overseas trips last year, paying visits to China, Japan, and Europe, but that didn’t bring any concrete business benefits. Numerous analysts have concluded that Semiconductor Vision 2030, Samsung’s plan, released last month, to boost investment in system semiconductors, was an unavoidable choice, given the collapse of the memory semiconductor market. The son has parted ways with his father, who focused on blazing trails and shaking things up at every turn. Take, for example, Lee Kun-hee’s warning upon his return to management in 2010 that Samsung’s leading products and businesses would disappear within a decade.
Figures both inside and outside the group believe that Samsung is facing much more uncertainty than in the past. Samsung Electronics’ operating profits in the first quarter of this year were the worst in 10 quarters. The company’s overreliance on the memory semiconductor business has come back to haunt it. The Galaxy Fold was supposed to transform the smartphone market, but its US launch was delayed on Apr. 23 amid embarrassing reports about product defects. Business insiders share the belief that the company was tripped up by its ambition to be the “first mover.” The next challenges that Samsung is likely to face are the Supreme Court’s verdict, which is expected to come in June, and the ongoing investigation of Samsung BioLogics. The chaebol could once again find itself without anyone at the tiller.
By Song Gyung-hwa, staff reporter
Please direct comments or questions to [english@hani.co.kr]
