By Kim Tae-gyu
Korean tycoons are turning to their younger brothers in their attempts to reinvigorate troubled subsidiaries as demonstrated in the year-end reshuffles by LG Group and SK Group.
LG Group, the country’s fourth-largest conglomerate, took initiatives this September when its Chairman Koo Bon-moo appointed his younger brother Koo Bon-joon as chief executive officer of the group’s struggling flagship, LG Electronics.
The Seoul-based company was once regarded as a contender to compete with its cross-city rival Samsung Electronics, the world’s biggest maker of memory chips and flat-panel displays.
However, the outfit struggled to find its feet this year ― it chalked up 185.2 billion won in operating losses during the July-September period for its first quarterly loss in four years.
Prospects are also not too good as the market consensus is that LG Electronics will remain in negative territory over the final quarter with operating losses in the neighborhood of 300 billion won.
In this climate, Chairman Koo seemingly expects his sibling to come to the rescue of the electronics giant, which lags behind in the mobile phone business amid the smartphone frenzy.
SK Group, the third-largest chaebol, followed suit this month in its shake-up.
Chey Jae-won, SK Gas vice chairman and younger brother of SK Group Chairman Chey Tae-won, was promoted to the senior vice chairman’s post to head its newly-fangled panel of vice chairpersons across the group.
His official job description is to take charge of coordinating group-wide strategies and finding next-generation cash cows. He is expected to be involved with the iconic affiliate of SK Telecom.
The country’s foremost mobile operator has ruled the domestic market over the past decade but its dominance has been undermined this year by runner-up player KT, which jacked up its customer base through the Apple iPhone.
Since its debut late last year, the fancy smartphone has attracted more than 1.6 million clients to threaten the pole position of SK Telecom.
Analysts point out this prompted Chairman Chey to replace the SK Telecom CEO as well as offering more responsibility to his brother, who is also registered as an executive of the wireless carrier.
The heads of bigger conglomerates Samsung Group and Hyundai-Kia Automotive Group did not adopt the same tactic of resorting to their younger brothers. Chairman Lee Kun-hee of the former has no younger brothers while Chairman Chung Mong-koo of the latter has too many.
Instead, they beefed up their offspring’s grip on their groups ― Lee promoted two of his three children to president this year, while Chung’s son Eui-sun is already vice chairman.
Hyundai Automotive’s chairman is currently battling the widow of his deceased younger brother.
Hyundai Group Chairwoman Hyun Jung-eun, the wife of the late Mong-hun, has pulled out all the stops to acquire the country’s largest builder, Hyundai Engineering and Construction whose controlling stake is now up for sale by creditors.
The shipping-oriented group was picked as a preferred bidder by outdoing Hyundai Automotive in the two-way race. But it lost its preferred-bidder status as suspicions rose over its funding scheme.