With the death of Li Jianxi, where is the “postmaster” Lee Jae-yong leading the Samsung Empire?

  Special correspondent Xie Yang

  According to Yonhap News Agency It is reported that on October 25, Samsung Chairman Lee Jianxi passed away at the Seoul Samsung Hospital at the age of 78.

   Lee Jianxi is known as the “President of South Korea’s economy”. He led Samsung to dominate the global consumer electronics market, but he was ultimately no match for the aging of the body. In May 2014, Li Jianxi suffered a myocardial infarction and was admitted to the hospital. Since then, he has been in a coma and his condition is confusing.

   Samsung issued a statement saying that when Lee Jianxi died, his family, including his son and the actual company leader Lee Jae-yong, were all by his side. “The chairman is a true visionary. He transformed Samsung from a local company to a world-leading innovator and industrial powerhouse,” Samsung said in a statement. “His legacy will be eternal.” Lee Jae-yong He said, “All of us at Samsung will cherish his memory and thank him for the journey we have traveled together.”

   Lee Jianxi left a behemoth for Lee Jae-yong. The New York Times once described the existence of Samsung’s business empire: “Wake up in the apartment built by Samsung C&T, turn on the Samsung TV, Check the weather forecast on the TV channel run by your in-laws. In the subway, you can use your Samsung Galaxy smartphone to watch how the Samsung Lions lost the baseball game the night before. In addition, you can use Samsung’s credit card to buy everything.”

   Just as every Korean citizen cannot escape the influence of the Samsung Group in his lifetime, Lee Jae-yong is also stuck in the predicament of being the successor of the chaebol. For many years, the chaebol family only held a minority of shares, but through a complex shareholding structure, it has achieved pervasive control over huge corporate groups and hereditary possession of corporate leadership positions; on the other hand, President Moon Jae-in’s Many ruling slogans also represent the voice of the people against the chaebol and the demand for social reform.

   After the death of Li Jianxi, the Samsung Empire bid farewell to the chaebol era, where will Lee Jae-yong lead Samsung?

   Successor

   On May 6, 2020, Samsung Electronics Vice President Lee Jae-yong apologized at Samsung Electronics’ headquarters in Seocho-dong, Seoul, saying that he did not intend to The management right is inherited to the children.

   If what is said is true, then the family heritage of the Samsung Empire will come to an end in the third generation. Different from his father’s image as an iron-fisted entrepreneur, the 51-year-old Lee Jae-yong was once described as an aggressive reformer in the Western world and maintained close ties with tech giants such as Jobs and Larry Page, but in South Korea, He is always full of controversy.

   This is the second time that Lee Jae-yong publicly apologized to South Korean citizens since the group’s hospital broke out in June 2015: “Although our technology and products are world-renowned, the world views Samsung However, his vision is still cold. All of this is my fault.” He also responded to controversies such as previous bribery scandals and corporate executives obstructing the establishment of labor unions.

   Lee Jae-yong stayed safely in the shadow of his father, Li Jianxi, before the spotlight of the world hit him.

  Different from his father’s tragic experience of seizing a daughter, Lee Jae-yong has only three younger sisters. In addition to the tradition of male heirs that South Korea has always pursued, he has been regarded as a successor since he was young.

   Even so, the outside world still knows very little about him. It wasn’t until Li Jianxi was admitted to the hospital in 2014 that Li Zayong really appeared in front of the world.

   2015 was a critical moment when the Samsung empire was facing the transfer of power. Lee Jae-yong, who was burdened but had never been interviewed by the media, made an exception to allow reporters from Fortune magazine to go deep into every corner of Samsung. And the CEOs of the two subsidiaries of the group came forward to talk about the challenges they faced.

   It’s intriguing that, according to Fortune’s reports at that time, most of Samsung’s executives said that Lee Jae-yong’s top priority is to simplify the complex company structure, and while stimulating Samsung’s management to have an innovative spirit, insist on Globalization strategy.

   Since the second half of 2013, Samsung Group has been promoting internal business restructuring, adjusting or transferring overlapping business units between subsidiaries, and decisively selling subsidiaries with poor competitiveness and synergy; 2015 On May 26, 2005, Samsung Group’s subsidiary Daiichi Woolen and Samsung C&T held a board of directors to decide to merge. According to this decision, the two companies will complete the merger as of September 1, and the internal reorganization of Samsung Group will further accelerate.

  From the logic of the interests of the entire family, this merger has far-reaching implications—similar to most South Korean chaebols, the Lee family only owns relatively few shares in Samsung’s entities, but through complicated Cross shareholding maintains control. For example, according to Bloomberg’s data, Li Jianxi only owns 3.8% of Samsung Electronics, but he is the largest shareholder of Samsung Life, owning 20% ​​of the shares. Samsung Life holds 8% of Samsung Electronics. These shares, combined with shares in other entities, allow Lee Jianxi to control more than 20% of Samsung Electronics.

   This complicated structure caused headaches for the successors, especially after Li Jianxi became seriously ill, the family’s control was seriously affected.

   In fact, in South Korea, whether it is the SK International Financial Fraud in 2003, the Hyundai Glovis scandal in 2006, or the Samsung Special Prosecution Case that led to Li Jianxi’s probation in 2008, the root cause is to save Family management rights and pave the way for the next generation to take over.

   This is the fate of the successor, and Li Zaiyong is no exception.

  Gray area

   In June 2017, Lee Jae-yong had a difficult time at the Seoul Central District Court.

   He was charged with several crimes, including bribing a total of 43 billion won to Choi Soon-sil in exchange for Park Geun-hye’s government to support the merger of Samsung C&T, a subsidiary of Samsung Group, and Cheil Woori. In addition, Samsung is suspected of providing funds to a German legal person controlled by Choi Sun-sil for use by Choi’s daughter in the name of training equestrian players.

  Although he admitted to bribery, Lee Jae-yong denied that it was political black money: “The president forced the funding, and I am the victim. Who can refuse the president’s request?” Outside the court, since the post-war “right The public opinion that Samsung is good for Korea” has dissipated, replaced by banners of demonstrators, which Yonhap News called “a typical example of political and capital power struggle.”

   Two months later, Li Zayong was sentenced to five years in prison. After spending a year in prison, he was released on probation. In a sense, he was passing his father’s The old way: Li Jianxi received two presidential pardons for being involved in scandals.

   In the past two years, the Samsung Group has been shaken under the double attack of the “Blast Door” and the “Bribery Door”. Although it achieved record profits in 2017, the group is facing a series of challenges, especially It’s Samsung Electronics. In 2017, chip manufacturing drove a surge in its sales, but experts warned that this “money tree” would soon dry up.

   On the other hand, due to the ambiguous relationship between the Samsung empire and power, and the market-monopoly chaebol system, domestic opposition has grown stronger.

  Samsung Future

   As early as the 2017 South Korean election, Moon Jae-in, who had not yet been elected at the time, said that unless the chaebols and large enterprises are reformed, there will be no real growth of. He specifically proposed to focus the reform on the four major groups of Samsung, Hyundai Motor, SK and LG.

   Moon Jae-in was therefore called “the warrior who attacked the evil dragon of the chaebol”.

   Korean scholars previously believed that the content of Lee Jae-yong’s apology in May, if it can be implemented, is expected to completely change Samsung’s future direction, especially breaking the foundation of the chaebol system, that is, guaranteeing operations through family management. This point of stability will have a profound impact on Samsung and even South Korea’s chaebol system.

   There are four points that Li Zairong responded to earlier, including disputes over inheritance rights, protection of labor rights, listening to diversified voices, and ensuring the independent operation of the committee. As the actual power holder of a huge business empire, he seems to want to change his father’s harsh corporate culture in a more “people-friendly” way.

   The chief analyst of the Korea Economic Research Institute, Zheng Qintai, pointed out that from the content and wording of Lee Jae-yong’s apology, it exceeded previous expectations of the outside world: “For a company, it is a painful process. But it is an important opportunity and change for the reversal of the image of the Korean people to the company.”

   On the other hand, after last year’s Japan-Korea trade war and the cold winter of the semiconductor market, facing the black epidemic Swan, the most important Samsung Electronics in the Samsung Group is accelerating reform.

  Li Jianxi has passed away, and Li Jae-yong is on his shoulders. He is deeply influenced by modern western business management concepts, where will he lead Samsung?

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