Desk column: Time-honored chaebol system draws wide attention
Instead of his bed-ridden father, Samsung Electronics Vice Chairman Lee Jae-yong is practically leading the country’s largest conglomerate, Samsung Group.
And people would have believed that his 20-year-old only son would eventually take over the sprawling group just as Lee Jae-yong did after Chairman Lee Kun-hee collapsed in 2014 due to heart attack.
Things are the same for other conglomerates like Hyundai, SK, LG, and Lotte where the founding families exert almost unchecked control through father-to-son power transfer.
All of a sudden, Lee Jae-yong said that he would not follow the time-honored tradition in a rare press conference held on April 6 in Seoul.
“Samsung has to recruit great talents without regard to their gender, educational background, and nationality,” Lee said, before apologizing for the group’s no-trade union policy.
“I will not hand over the management to my siblings. I made this decision a long time ago, but remained hesitant to make public.”
During a parliamentary session in December 2016, Lee said that he is ready to give up the managerial rights in case good talents take charge of Samsung.
But this marks the first time for Lee to publicly pledge that his son or daughter will not inherit the throne of the Samsung empire.
Critics played down the announcement as a public relations maneuver as an appeals court asked for changes of the top Korean conglomerate’s governance.
Lee has no luxury to disregard the request of the court, which might put the 51-year-old businessman back in prison.
Back in 2017, Lee served time for bribing former President Park Geun-hye in return for her offering help to beef up his control over Samsung. Lee was released the next year on a suspended sentence from an appeals court.
But the top court overturned the verdict last year to send it back to the high court for a review. The high court then ordered Lee to show visible efforts to enhance Samsung’s compliance.
Then, Samsung set up an independent monitoring committee, which came up with recommendations like scrapping the father-to-son power transition and bowing to the public for the no-union policy.
Lee followed the advice, reportedly despite the objection of his top lieutenants.
The acts may reduce the possibility of his going back to jail, but the third-generation tycoon now has new big burdens _ he has to find his successor.
Unless he breaks his publicly-announced words, his 20-year-old son or 16-year-old daughter cannot be candidates to head Samsung.
Who will lead Samsung in decades?
The 50-something chief is expected to lead Samsung for the next two or three decades. And then, who will succeed him? Can his successor exert the same influence and leadership as he does?
There are so many questions to be answered.
Some have talked about the Wallenberg family of Sweden as a role model for Samsung to emulate.
The Wallenberg family businesses, which include Ericsson, Electrolux, ABB, and SAAB, employ around two-fifths of Sweden’s workforce while representing the same proportion of worth at the Stockholm stock market.
Its family members just own the businesses, while letting professional CEOs take charge of management.
But it remains to be seen whether Samsung will be able to take a similar strategy.
Of note is Lee Jae-yong’s direct shareholding at Samsung affiliates is not so great. Like many other tycoons, he controls the group through complex cross-holding structures among the group’s subsidiaries.
And due to the separation of ownership and management, South Korea’s conglomerates may lose their most outstanding advantage of prompt decision-making followed by aggressive execution.
From now on, people would keep an eye on Lee Jae-yong to check if he would keep his promise. If he does, he has to take a whole new path, an uncharted territory.
Time will tell if he will stick to his pledges and how well he will be able to discover an alternative future for South Korean conglomerates as chief of the country’s business bellwether.