Input 2021.04.05 15:00
Samsung C&T received an order for the reconstruction of Raemian One Pentas (Shinbanpo 15th) in Seocho-gu, Seoul in April of last year, and returned brilliantly after receiving the order after five years. Just a month later, he got the reconstruction of Banpo Jugong 1 Complex 3 Ju-gu, Seocho-gu. Real estate industry officials hailed as’the return of the king’.
In addition, in April of this year, Raemian Won Bailey (Shinbanpo 3rd, Gyeongnam), which devoted all his heart to luxury, will be sold to the general public in a real location along the Han River in Banpo-dong, Seocho-gu, Seoul. When all apartments are completed, the whole area will be reborn as a’Raemian Town’.
The construction industry sees Samsung C&T, which has returned splendidly after five years, with envy, but some of the business circles have a different perspective. Rather, it is sometimes pointed out as’handshake (惡手)’. In the case of Banpo One Bailey, which is receiving attention in one body, there is a recurring turmoil as the transfer pitch between the members and the union continues. In the third week of the Banpo Complex 1 order, noise continues to emerge, such as litigation with competitors.
In particular, a question mark appears in the business process of Samsung C&T considering that Samsung Group and its affiliates are not engaged in any controversial actions during the absence of the total number, and that Vice Chairman Lee Jae-yong is about to have a trial on the merger between Samsung C&T and Cheil Industries. There are many views. Projects under conflict are likely to lead to disputes over defect repairs after completion. This is the reason why Samsung C&T is expected to win negative orders as a result, considering the reputation it will lose.
According to the construction and real estate industry on the 5th, the general pre-sale schedule of’Raemian One Bailey’, which Samsung C&T is in charge of construction, has been virtually confirmed in April. The union signed a contract for sales of members last month, and plans to start general sales in late April. Raemian One Bailey is a place that attracts attention because it is designed as a high-end complex in Banpo, Seoul.
Samsung C&T, which had not won an order for One Bailey in 2015 for the last time, recorded two games and two wins in five years before the order. It is a splendid resurrection. Raemian One Pentas (Shinbanpo 15th) and Banpo Jugong 1st Complex 3 Jugu (tentatively named Prestige by Raemian) are representative. When winning the order for Raemian One Pentas, Lee Young-ho, CEO of Samsung C&T, conducted an all-out war. When it received an order for Banpo Jugong Complex 1, it confronted Daewoo E&C and received an overwhelming vote and succeeded in winning the order.
When One Bailey is completed, the Gubanpo area in Seoul will be reborn as a’Raemian Town’. Including the Banpo Raemian Firstage completed in 2008, a total of 5722 households, including the 15th Sinbanpo (641 households) and the 3rd district of Banpo Jugong Complex 1 (2091 units), will be transformed into new apartments with the Raemian brand.
With successive orders, Samsung C&T’s order backlog also jumped significantly. Considering the reconstruction cost of Dogok Samho, Gangnam-gu ordered last January (approximately 91.5 billion won), the order of 1.4 trillion won was achieved at once thanks to the’Return of Raemian’. Samsung C&T has many business units that are sensitive to the economy, such as trading companies, fashion, leisure, food and beverage, and Raemian, who re-entered in the aftermath of Corona 19, reduced the decrease in sales.
◇ Endless’noise’ after splendid victory
However, there are also opinions in the construction and real estate industry that the reconstruction project may not be helpful to Samsung C&T despite such a winning order. This is because the brand value is showing signs of deterioration in the conflict between members and unions, conflicts between construction companies over order receipts, and disputes over defect repairs with homeowners after completion. Such concerns are rising even more because of the absence of Samsung Electronics Vice Chairman Lee Jae-yong.
First of all, there are many views that the conflict will ignite at the One Bailey workplace. This is because some members of the union filed an application for’temporary disposition to prohibit the signing of the sale of members of the union’. Since the request for provisional injunction has been dismissed, the sales process is undertaken, but the union members say that conflict can grow again at any time.
In particular, there is a high possibility that the conflict between the union and its members will increase due to the conflict between the contractor and the owner after the completion of One Bailey. Usually, the cooperative decides in the reconstruction and maintenance business and the construction work is in charge of the construction, but in the problem of repairing defects after completion, the cooperative falls behind and a fight between the owner and the contractor becomes. An official at a large construction company said, “After completion, there will be more and more residents not only related to the union, such as members of the union, but also general salespeople. The controversial material problem of Won Bailey will eventually become the responsibility of the contractor.”
In fact, in One Bailey, the living room windows of a 34~68 pyeong house type are designed the same, with a width of 3.6m, which is causing controversy. The union was in a position to have had no choice but to use the windows of Profine, a German company, but some members are questioning whether they should use the windows of Profine without leaving high-quality materials in Korea. Due to a member’s complaint, Seocho-gu requested the Seoul City to check the status of the union, and a joint inspection is expected to take place sooner or later.
The members are also sending suspicious eyes to Samsung C&T by reporting a relay to the Samsung Compliance Committee. They are insisting, “Samsung C&T should sincerely elucidate the rational doubts of the members about the construction of One Bailey,” and “break the link of collusion with the union.”
The Raemian One Pentas (Shinbanpo 15th), which was ordered last year, could also hurt Samsung C&T’s Raemian image in the future. This is because Young-ho Lee, president of the construction division, who attended an unusual order a few weeks ago at the time, said, “We will 100% keep our promises and make the 15th Shinbanpo the most shining complex in the center of Banpo.”
In the maintenance industry, it has been said that the remarks of President Lee’s “to keep 100% of the promises” are very problematic. An official in the maintenance industry said, “There are many things that can vary, such as construction period and design, so it is a very dangerous remark,” he said. “There is a high possibility that the problem will come back later.”
Banpo 1 Complex 3 weeks ago, he was caught up in high sustenance and high power development. Daewoo E&C said in May last year that it would sue Samsung C&T, saying, “Chairman H has colluded with Samsung C&T to spread false information to its members.” Earlier, Mr. H sent a text message to the members of the Banpo District 3 district, stating that Daewoo E&C should not be selected as the Banpo 3 District Contractor.
In the letters of Mr. H, “The worst contractor worse than Hyundai Industrial Development that we had out”, “Daewoo E&C, who submitted a proposal that cost at least tens of billions of dollars more than Samsung,” and “Daewoo cannot relocate because it cannot borrow 10 won for relocation. “, “Daewoo’s contracts and proposals look very good when viewed by the general public, but are completely fraudulent in the eyes of experts like me.”
Daewoo E&C said, “Mr. H conspired with Samsung C&T and disseminated false facts about Daewoo E&C to members of the Banpo District 3 the previous day through a mobile phone text message.” Mr. H acknowledged that he has been in constant relationship with Samsung C&T, such as’Because I brought Samsung’ and’I promised Samsung E&C that I will guarantee that promise will be kept’. I did” insisted.
On the other hand, at the time, Mr. H argued in a call with Chosun Biz that “the message sent about Daewoo E&C is 100% true, so it is not spreading false facts. As far as reconstruction is concerned, I wrote my opinion as an expert who was proud to be the number one.”
In the construction and real estate industry, even though Samsung C&T has been winning orders after a long time since 2015, it has shown the potential to capture all of the real estates in the Gangnam area, but considering the conflict that will arise in the future, it is highly likely to be a “negative order” in practical terms.
In the winner-take-all order battle, there are inevitable nerve wars and black propaganda between contractors, and there are frequent disputes over defect repairs with residents after the completion of apartments. This noise can damage the company’s image, as Samsung C&T is at the top of the Samsung Group’s governance structure, so image management is important.
In particular, the Samsung Group has been involved in various political storms in recent years and is undergoing various trials. Vice Chairman Lee Jae-yong is about to have his first trial after being prosecuted for fraudulent transactions and market price manipulation under the Capital Market Act over the issue of the merger between Samsung C&T and Cheil Industries.
An official from a large construction company said, “Samsung C&T’s resumption of the maintenance business will definitely help sales, but will it act as a risk to the trials of the total number such as Samsung Biologics’ fraudulent accounting investigation?” Can be a burden.”
Another construction company official said, “There are a lot of civil complaints protesting in front of the office building due to disputes related to housing defects, and the owners only set up their headquarters in a different place.” “There is a side that raised the risk of Samsung C&T and Lee Jae-yong, vice chairman.”
In 2015, Samsung C&T had a painful experience of monitoring and following a Raemian inhabitant, and its reputation fell “dwell”. When a resident of Samsung Raemian apartment in Gileum-dong, Seongbuk-gu, Seoul, attended the Samsung C&T shareholders’ meeting for several years and filed a complaint about parking noise, it was revealed that employees of the Customer Satisfaction (CS) team monitored and followed the complaint before the shareholders’ meeting. At the time, CEO Chi-Hoon Choi said, “I did a very wrong behavior” and said, “I deeply reflect and apologize for making water and causing concern.”
In addition, according to the Samsung C&T Business Report, the Seoul High Court sentenced one incumbent senior executive at Samsung C&T to two years in prison and three years probation for business embezzlement (Act on Aggravated Punishment for Specific Economic Crimes, etc.) in August of last year. It was alleged that Samsung C&T spent the company’s expenses in the process of repairing defects in the house constructed by Samsung C&T to the part where it was not obligated to repair.
Another business official said, “Raemian is not the main force of the Samsung Group, but if it damages the image of the group and the general manager at an important time, it will result in more harm than good.” Samsung C&T, which has a large number of stocks, could be burdened with successive orders,” he said.
An official from Samsung C&T said, “The reconstruction project is basically constructed as specified by the cooperative, so there is not much that the contractor can decide,” he said. “The material selection is a problem that the contractor (Samsung C&T) cannot do.” He added, “We are picking up the order list considering compliance (compliance management) as our first priority,” he added. “We are conservatively winning orders centering on business areas where concerns will not appear.”