[Courtesy of Samsung]
Concerns about Samsung Group's future are growing amid a prolonged state of leadership vacuum after Samsung Electronics Vice Chairman Jay Y. Lee was given a five-year prison sentence last month for his involvement in a corruption scandal.
The first appeals hearing for Lee begins on September 28 with the verdict expected to come in January or February next year. For Samsung, a global IT company, the role of its leadership is crucial in coping with a rapidly changing market environment, to associate with overseas investors, grasp the global trend and make quick decisions.
However, Lee's imprisonment is expected to last for at least a year since his arrest on February 17. This is the reason why jitters are increasing in South Korea's business community about Samsung's global competitiveness due to delays in important decision-making.
The son of Samsung's bed-ridden group head Lee Kun-hee was convicted of bribery and other charges on August 25 after being linked to a scandal that led to the ouster of ex-president Park Geun-hye.
-- Samsung's disrupted global network and cash cow --
[Courtesy of Samsung]
As one of South Korea's leading businessmen, Jay Y. Lee has mapped out investment plans for Samsung's cash cow businesses by engaging in meetings with global entrepreneurs and politicians from various countries.
"Making informal trips abroad several times a year, the vice chairman has met with businessmen and senior local officials to coordinate and set the group's direction," a senior Samsung official told Aju News. "But as the trial drags on, his work on making a decision on Samsung's future came to a halt."
In particular, Lee missed this year's Boao Forum and cannot attend next year's session, which is expected to play a pivotal role in making a breakthrough in Samsung's troubled business that followed a row over a Terminal High Altitude Area Defense (THAAD) system.
The annual Asian version of the Davos Forum from late March to early April in Hainan Dao, China, is seen as an important event that provides an opportunity for South Korean businessmen to establish human relations with China's leading political and business figures. As a forum director, Lee has shown a strong interest, participating in the forum for four years in a row since 2013.
Lee's continued absence in the forum is fatal, especially when China is aggressively investing in semiconductor because it would help Samsung read the minds of Chinese rivals.
The Allen & Co. Media Conference has also received Lee's attention as he has attended the event for 15 consecutive years since 2002. This event, also known as "Billionaire Summer Camp", is a venue for businessmen to exchange practical discussions in closed meeting sessions. There, Lee met with important people such as Warren Buffett, Bill Gates and Mark Zuckerberg to expand his human network.
-- Possibility of Samsung's fall like Nokia and Motorola --
[Courtesy of Samsung]
The absence of decision-making people and organizations is a big problem. Professional managers have systematically settled into the structure of each Samsung affiliate, but the group chief has exercised a broad influence on strategic group-wide issues such as investment, the sale of group units and mergers and acquisitions.
In fact, this vice president has been in charge of sorting out and pulling up the affiliates that have been sluggish through the process of selection and concentration. For example, Samsung's decision to sell its subsidiaries involved in chemical and defense businesses was the work of Lee who has tried to establish a first-class company by focusing on electronics.
Recently, Samsung Electronics recorded a record operating profit of 14 trillion won ( US dollars) in the second quarter thanks to a semiconductor boom. However, there is a risk that the consumer electronics (CE) market, one of Samsung's main fields, could become sluggish. The CE division posted 10.9 trillion won in sales, down one percent from a year ago, and an operating profit of 320 billion won in the second quarter of this year, down 68 percent.
This is why Samsung should come up with a second innovation not to lose its market dominance in the home appliance market. "Without a leader, it's not easy for Samsung to a change right now," said an electronics industry official said. "We should not forget companies like Nokia and Motorola which have died out."
"In such a structure run by professional managers, it's not necessary for Lee to grasp and take care of every detail," an industry source said. "But there will be no substitute in coordinating businesses among subsidiaries, making the full use of global connections, and painting a big picture."
reporter
Yoo Jin-hee / Kim Ji-yoon
swatchsjp@ajunews.com
