New Year’s Business Keywords: Post-semiconductor, Stability for Samsung Electronics while Revival in Chinese Market, Harmony for Hyundai Motor | BusinessKorea

Sunday, March 18, 2018

Samsung’s new managements need to overcome the crisis of the absence of Samsung’s de facto head Lee Jae-Yong while Hyundai managements should cope with the difficult task of restoring relations with the labor.
Samsung’s new managements need to overcome the crisis of the absence of Samsung’s de facto head Lee Jae-Yong while Hyundai managements should cope with the difficult task of restoring relations with the labor.
Seoul, Korea
2 January 2018 - 2:15pm
Jung Suk-yee

Samsung Electronics ushered in the New Year with the absence of Vice Chairman Lee Jae-yong. As Vice Chairman Kwon Oh-hyun, who had led Samsung, and President Yoon Boo-keun and Shin Jong-kyun stepped down from management, the younger management, such as President Kim Ki-nam, Kim Hyun-suk and Koh Dong-jin, will lead the “New Samsung.” The new appointees need to overcome the crisis of the absence of Samsung’s de facto head Lee Jae-Yong and make a new growth breakthrough, like post semiconductor, at the same time.

In fact, Samsung Electronics posted a record-high performance last year due to the semiconductor boom but it’s a whole new ball game this year. First of all, the upward movement in memory chip prices, including DRAM and NAND flash chips that helped the company achieved the highest ever performance, is expected to let up in the first half of this year. The supply will continuously not be able to meet the demand for a while but it will not remain at the same level of last year. Therefore, Samsung Electronics need to gain a foothold for a take-off in the foundry sector, which is less competitive than the memory business, this year.

Samsung Electronics also faces a thorny road for its television business. The company had ranked first in terms of global TV market share for 12 years in a row until last year but all eyes are on whether it can maintain the number one spot this year again. Samsung Electronics’ share in the global market decreased below 20 percent, which was the marginal line, in the third quarter last year. The question is whether the company’s enlargement and premiumization strategy to secure profit in the sluggish television market will work.

Hyundai Motor and its smaller affiliate Kia Motors are in the worst crisis ever as their sales last year fell short of its target by 10 percent owing to China’s retaliation over the U.S. Terminal High Altitude Area Defense (THAAD) missile system. Their business keywords for this year are recovery and harmony. It’s a matter of recovering its sales in China, which plunged nearly 30 percent. The two companies also need to boost their sales in the U.S., one of the two largest car market along with China, by expanding sports utility vehicle (SUV) lineups, such as the Kona and the new Santa Fe. Internally, they face a difficult task of restoring relations with the labor. Even after a series of strikes, Hyundai Motor’s labor and management ended up failing to reach a settlement on wages and a collective agreement by the end of the year for the first time in history. How quickly labor and management end the dispute is expected to determine this year’s productivity.

At the year-end party of SK Holdings and SK SUPEX Council, SK Group Chairman Chey Tae-won encouraged employees, saying, “Let’s keep creating a mythology for SK next year.” As Chey mentioned, SK Group has a task of realizing “Beyond 2017” based on aggressive investment on hand this year. Moreover, the group needs to flesh out a “Deep Change” management strategy along with society proposed by Chey. SK Group needs to create not only economic value but also social value this year. Based on this, the group is expected to make a move to open a new blue ocean market as well as expand the “sharing infrastructure” management strategy, which was introduced in its major affiliates last year, to other affiliates this year.

LG Group is forecast to lay foundation for new business this year again. The keywords for its new business pushed ahead by the group level are organic light emitting diode (OLED), automotive electronic and electric car battery. In addition, the keyword for management is the maintenance of profitability of its existing business. The group needs to secure profits of its existing businesses, such as LG Electronics’ home appliance business, which achieved an exceptional operating margin of some 10 percent for the manufacturing business, and LG Display’s liquid crystal display (LCD) business.

Lotte Group barely averted the absence of the head as the court convicted Chairman Shin Dong-bin of embezzlement and breach of trust but handed down a suspended prison sentence against him. However, Shin is still awaiting the first trial on charges of corruption scandal called “Choi Soon-sil gate.” Therefore, the group is expected to focus more on realignment this year. It should stabilize the holding company system, which was adopted in October last year, get rid of 11 cross shareholdings by the end of March this year and remove a possible threat to management from Lotte Holdings in Japan which was raised question during the trial. Lotte Group also needs to increase the sales which shrank after the Chinese government took retaliatory measures over the deployment of the THAAD. 

POSCO, which celebrates its 50th anniversary this year, came up with the management keywords of revival and 100 years of history. The company will not be content with its present fortune but focus its abilities to jump up for the remaining 100 years. Chairman Kwon Oh-jun will declare its future visions and new management strategy to become a company with 100 years of history in April next year. The group will announce its global vision to grow the high-end steel market and the ASEAN market further based on its high value added rolled steel products, like “Giga Steel.”

GS Group will advance business by strengthening the competitiveness of its existing businesses, such as energy and distribution, and seeking out its new growth engine for the future. Hanwha Group presented “Global Hanwha” for its business keyword by establishing the basis for sustainable growth and competitiveness improvement. Hanjin Group is expected to help Korean Air Lines stabilize its new business and ensure internal stability this year.


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