As Samsung Electronics vice chairman Lee Jae-yong was sentenced to two years and six months in prison at a court of repatriation for the destruction of the Gukjeong Nongdan and was arrested in court, Samsung Electronics faced the bad news of the absence of the total number in three years.
In February 2017, when Vice Chairman Lee Jae-yong was first arrested for the case of’Gukjeong Nongdan’, Samsung Electronics tried to stabilize management through an emergency management system centered on professional managers and the board of directors. Therefore, the observation that the emergency management scenario due to the second adverse event will be prepared in a similar direction is dominant.
In the case of Samsung Electronics, which is a core subsidiary, it is highly likely to promote a stable management system rather than aggressive management through a cooperative system of CEOs such as CEO Kim Ki-nam, head of CE division, Dong-jin Ko, head of IM division, and CEO Yoon-ho Choi.
■ Business environment is completely different from 3 years ago…It could be 10 years lost
However, there are many concerns that it is impossible to affirm whether the crisis can be overcome with a system of professional managers, as the economic situation, which is undergoing tremendous changes such as Corona 19, is greatly different from the time when Vice Chairman Lee Jae-yong was arrested three years ago.
First of all, it will not be easy to quickly decide on large-scale investments in future growth businesses such as’System Semiconductor 2030′, 6G, AI (artificial intelligence), and automotive electronics business to achieve global No. 1 system semiconductor.
In particular, it is pointed out that’New Samsung’, as revealed by Vice Chairman Lee, is highly likely to be affected by this arrest. Vice-Chairman Lee announced the implementation plan of New Samsung, which included abandonment of the 4th generation management right, withdrawal of non-union management, reinforcement of compliance management, and promotion of new business.
In addition, it is expected that large-scale investments and mergers and acquisitions (M&A) will not be easy as it will be difficult to make heavy decisions due to the absence of the total number. Indeed, since Samsung Electronics acquired Harman in the United States three months before his arrest in 2017, there has not been a significant merger and acquisition.
The reason why business groups have raised concerns over the possibility that Samsung’s normalization of management will become uncertain due to the re-restraint of Vice Chairman Lee is also because of the severe reality surrounding the Korean economy.
This is because the pursuit of China’s semiconductor industry, display, and mobile phone business is accelerating, and competition among competitors for automobile electronics and bio, which are considered as future growth engines, is accelerating. There is also the worst concern that Samsung’s super-gap strategy itself, which is keeping the world’s No. 1 in memory semiconductors, smartphones, and TVs, may collapse in an instant.
In a statement that day, including the National Federation of Entrepreneurs, the economic organizations said, “Considering Samsung’s share of the Korean economy and its status as a global company, the contraction of Samsung’s management activities caused by this ruling does not adversely affect the entire Korean economy, not just individual companies. I’m afraid it might be.”
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In addition, it is pointed out that this could lead to a’lost decade’, which is difficult for Samsung to imagine, since Vice-Chairman Lee left a trial on the alleged illegal succession of management rights, which was prosecuted last year while in prison.
A business official said, “The situation has changed a lot from when Vice Chairman Lee Jae-yong was first arrested. At that time, there was no corona pandemic or Japanese export restrictions.” The official added, “As competition intensifies, uncertainties such as Samsung Electronics’ semiconductors and smartphones, which require quick management decisions and investment decisions, are increasing.”