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Jae-yong (behind)

By Kim Jin-cheol, staff reporter

Samsung Electronics president Lee Jae-yong was promoted to the position of vice chairman of Samsung Electronics, it was announced on Dec. 5. Lee, 44, the only son of Samsung Electronic chairman Lee Kun-hee, was named both Chief Operating Officer and president in separate appointments in 2010.

The group explained that Lee would be “broadening his management experience” in his new position. Observers in the business community said his larger role was a sign that a transfer of power to the Samsung family’s third generation is under way.

Samsung described Lee Jae-yong as a “manager with a global business sense and network who has contributed to putting the company’s smartphone, television, semiconductor, and display efforts in a solid first place globally by coordinating its competition and cooperation with rivals and strengthening ties with customers.”

In particular, it praised Lee for “contributing to the best management performance since [the company’s] founding through providing support from the very front lines in every area of Samsung Electronics’ management, even in a difficult environment where global competitors are facing serious financial difficulties.”

It also said Lee would “make even greater contributions on the ground to all of Samsung Electronics’ efforts.”

With this, Lee seems set for involvement in all areas of the company’s management, while also pushing an electronic auto parts effort in the Chinese market, which accounts for 20% of world car production.

“He’s very interested in the electronic auto parts project,” said a senior Samsung executive. “China is a place where automakers the world over have congregated, and he’s thinking of setting up an electronic auto parts factory there. That’s also why he’s meeting with senior figures in China and learning more about the local culture.”

Some observers in the business world are taking his promotion as a signal that Samsung is speeding up its transfer of power to the third generation of the founding Lee clan. By this analysis, chairman Lee Kun-hee is getting set to hand the group’s reins over to his son. The younger Lee’s increased external activity and frequent media exposure of late are also being read along similar lines.

Indeed, since the second half of 2011, Lee has been meeting with top executives at Volkswagen, General Motors, Toyota, and other global automakers. He has also met several times with major clients for everything from Samsung Electronics parts to finished products. In June, he met with Chinese vice premiers Li Keqiang - who is set to lead his country alongside newly appointed general secretary Xi Jinping - and Wang Qishan.

Group insiders said analyses linking the new developments with the generational transfer of control were premature. The argument is that Lee Kun-hee is still very active in the group - coming to work twice a week to handle major concerns, and having traveled overseas seven times this year.

“People have been talking about how the ‘transfer of group power is being sped up’ ever since Lee Jae-yong was promoted to executive director,” said another Samsung executive. “That’s not the case. You should see it as him gaining a broader range of management experience.”

Some are already expressing concern about the promotion, seeing it as a risky move to put Lee in such a pivotal position when his management experience is still limited.

“Lee Jae-yong was promoted to vice chairman without sufficient opportunity to have his management abilities assessed,” said Kim Sang-jo, professor of economics at Hansung University and director of Solidarity for Economic Reform (SER). “Can we expect him to have the charisma his grandfather or father did as one of Samsung’s top three leaders? This looks like a bad choice for everyone: for him, for Samsung, and for the national economy.”

SER made its own statement on the decision, saying a “test of Lee Jae-yong’s management capabilities should come before any promotion.”

Noting that Lee is expected to be appointed as a board director at a shareholders’ meeting next year, the group added, “There first needs to be a plan for reforms, including changes to the makeup of the board of directors.”

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