By Kim Tae-jong
The health problem of Lee Kun-hee, the head of Samsung Group, has emerged as a major stumbling block to the group's move to realign businesses for organizational reform and power transfer.
Samsung Electronics Chairman Lee was admitted to hospital after receiving cardiopulmonary resuscitation (CPR) Saturday night, following a heart attack. Although the group claims that Lee is now recovering, concerns are still lingering considering his medical history and old age. He is 73.
Lee is almost a synonym of the current success of the nation's largest business empire. His influence and status at the group is as big as that of the late Steve Jobs at Apple.
Market insiders think his worsening health and old age are expected to speed up the ownership transfer of the conglomerate from the chairman to his three children. This would bring more new changes at the group, they said.
But it is uncertain whether the move will go smoothly as the power transfer is in its initial stages and Lee still makes key management decisions and presents the business vision for the entire group.
Earlier this year, the chairman stressed the conglomerate needs to move beyond market and technological limits as it is being challenged by the rise of international rivals in key business areas such as smartphones.
In line with his remarks, the group conducted a major reshuffle last month in an effort to increase efficiency based on so-called "Mach" management strategy. The Mach strategy was first initiated by the chairman almost a decade ago to emphasize the importance of speed in business management.
The group replaced six of seven executives at its future strategy office ― which plays a central role in charting out business strategies and coordinating the interests of group affiliates.
Last week, Samsung SDS announced that it will go public this year, which the group claimed is in line with its efforts to tap into overseas markets to move beyond the saturated domestic IT services market.
But market insiders think this is part of the group's restructuring and top management succession.
Lee's three children ― Samsung Electronics vice chairman Lee Jae-yong, Hotel Shilla President Lee Bu-jin, and Samsung Everland fashion division president Lee Seo-hyun ― are expected to secure more than 2 trillion won from the IPO.
Depending on how they spend the money will be critical to decide the direction and speed of the power transfer.
Earlier in March, Samsung SDI, the TV display and smartphone battery manufacturing arm, merged with Cheil Industries, the company's chemical and electronic materials affiliate. In September, Cheil Industries handed over its textile and fashion division to fellow affiliate Samsung Everland for 1.5 trillion won.
"The recent mergers among affiliates are seen as part of the generational ownership transfer within the group," a partner at a global consulting firm said.
In the meantime, the possibility of the sudden departure of the chief from the group also concerns many people here, given the group's huge contribution to the economy.
For example, sales of Samsung Electronics alone amounted to 228.6 trillion won last year or 16 percent of the nation's gross domestic product (GDP).