At Samsung, familial succession dies hard

Posted on : 2007-02-02 14:41 KST Modified on : 2019-10-19 20:29 KST
Father once again looks to pass mantle to son
 explaining Samsung's products to Rupert Murdoch
explaining Samsung's products to Rupert Murdoch

Since the 1997-98 Asian financial crisis, South Korea’s family-run industrial conglomerates, or chaebol, have made strides in improving their managerial practices. But one thing remains intact: familial succession. In particular, Samsung Group is ramping up to hand over the helm to Lee Jay-yong, 40, the only son of the group’s billionaire chairman, Lee Kun-hee, amid controversy over such transfers.

In 1987, Lee Kun-hee also inherited the group from his father, Lee Byung-chull. Samsung is now preparing for its ‘third-generation era.’ A senior executive at Samsung said, "Given the junior Lee’s age and experience, he may take over the vice chairmanship after two or three years."

Compared with his father’s experience, it will have been relatively easy for Jay-yong to ascend to the helm of Samsung. After a fierce competition and power struggles with his two elder brothers, Lee Kun-hee became a vice chairman at Samsung in 1978 at the age of 36. For the next nine years, Lee Kun-hee learned how to manage the conglomerate from his father.

"At that time, chairman Lee Byung-chull and vice chairman Lee Kun-hee had their offices on the same floor. The senior Lee scolded an executive that stopped by the junior Lee’s office before reporting to the senior Lee," said another senior-level Samsung source. According to the source, Lee Byung-chull told the executive that his son, as an "official heir," was barred from being involved in decision-making and had no real power.

In the years following, although Kun-hee had been more or less named as the heir to the Samsung throne, Lee Byung-chull continued to foster an atmosphere of indecision on the matter by allowing his other sons and daughters to attend the group’s executive meetings, the senior executive said.

In contrast, Jay-yong’s ascent was much less fraught with uncertainty. Some critics describe him as a "flower in a greenhouse," referring to how easily he was allowed to ‘blossom’ under his father’s tutelage. Unlike the situation of his father, Jay-yong has no rival in competition for the group’s crown. At 34, Jay-yong became an executive vice president of Samsung Electronics and was promoted to senior vice president and chief customer officer on January 17.

"Samsung’s top executives in the areas of semiconductors, telecommunications, and digital media will directly report to senior vice president Lee," said Lee In-yong, a spokesman for Samsung Electronics, following Lee Jae-yong’s January 17 promotion. Some analysts say chairman Lee directly handed the chief customer officer post to the junior Lee so that his son could move closer to inheriting the group’s crown.

People familiar with the group’s situation said the junior Lee has already built his own power connections at the company. An official at Samsung said there are talks that Jay-yong played an influential role for Lee Ki-tae, former head of Samsung’s mobile phone unit, to be shuffled into the position of vice chairman on January 17, a move which was portrayed as a promotion by the company but which Lee Ki-tae reportedly protested by skipping work for a week.

Please direct questions or comments to [englishhani@hani.co.kr]

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