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Samsung Group Changing Itself to Solidify 3rd-gen Ownership
Innovation of Corporate Governance
Samsung Group Changing Itself to Solidify 3rd-gen Ownership
  • By matthew
  • April 9, 2014, 08:53
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The Samsung Group is in pursuit of seamless innovation. The recent mergers between Samsung SDI and Cheil Industries, and Samsung General Chemicals and Samsung Petrochemical, which were determined in just three days, reflect the intensity of the drive. The group’s Chairman Lee Kun-hee ordered a so-called Mach management during his New Year’s address earlier this year, saying, “An enterprise can be compared to a living organism, which cannot survive without metamorphosis.”

Experts explain that the large-scale transformation is to accelerate the business restructuring for the entire group to revolve around Vice Chairman Lee Jae-yong. He has been at the center of corporate ownership since late 2010, when the 3rd-generation owners in the group took their positions as the presidents of the subsidiaries. 

The vice chairman became the largest shareholder of Samsung Everland, the holding company of the group, in 2011. He also increased his shares in the electronics and financial business arms through recent mergers between the subsidiaries. In doing so, he has solidified his presence over Lee Bu-jin, who heads the construction and chemical business units, and Lee Seo-hyeon, who leads the advertising and media arms. The complex shareholding structure among the siblings requires additional business reorganization. This is why various scenarios are coming out these days as to how the overhaul will end up.  

Another interesting point is the merger-based consolidation of the electronics subsidiaries, which are expected to be inherited by the vice chairman. The affiliates can be compared to the backbone of the vice chairman’s ownership in the group. At the same time, they assume a central role in the entire Samsung Group searching for future growth drivers, meaning the relatively less important subsidiaries may be put under the governance of the electronics arm. “Samsung has been in an unprecedented radical change for the last several years,” said an industry insider, adding, “The speed can be even faster down the road, in view of the chairman’s emphasis upon innovation.”