Samsungs New Home Shows Hopes, Hides Challenge
By Kim Yoo-chul
Staff Reporter
Samsung Electronics' new headquarters in the upscale area of Gangnam reveals its sheer power but hides a difficulty it may face meeting challenges.
The Samsung complex in Seocho-dong, south of the Han River, accommodates three high-tech "intelligent" buildings. Thousands of Samsung employees work in this "Samsung town," making it a bustling island in the center of Seoul's most pricey real estate.
The town has brought to an end the 30 years of Samsung's residence in the Taepyeongro area, downtown Seoul, where the crown jewel of Korea Inc. held court.
But moving from one place to another doesn't mean that Samsung has solved all its problems.
The new building is likely to witness the biggest challenges the company will ever undergo, namely a power shift in its ownership structure and another takeoff in its corporate evolution.
"We hope the relocation will lay solid ground for Samsung's next leap into a bigger and better company. But I believe big challenges are ahead of us," a 35-year-old Samsung employee, who wished to be identified by his family name, Huh, told The Korea Times, Monday.
The "Seocho Samsung Towers" are composed of three buildings, identified as Buildings A, B and C.
Building C, the tallest, with 43 floors and floor space of 389,000 square meters, serves as home to Samsung Electronics. Its affiliates ― SDI, Corning Precision Glass, Electro-Mechanics, Heavy, Techwin, Fine Chemicals, Total Petrochemicals and Economic Research Institute ― are also accommodated in that building.
The 35-story Building A is home to Samsung Life Insurance, while Samsung C&T is headquartered in the 32-story Building B.
Some 10,000 people work in the three buildings. According to Samsung officials, these buildings of reinforced steel and glass are "secure" against wiretapping.
"Samsung Electronics is truly integrated with its affiliates," a Samsung Electronics spokesman said.
Challenges Ahead
However, the new building doesn't mean a new start. Samsung Electronics faces baggage from its past and a future that is weighing down on it.
First, its bottom line remains a question mark at a time when the global economy is down.
Samsung Electronics' third quarter net profits were down 44 percent as its two main pillars ― semiconductors and flat-screens ― were directly hit by decreasing demand and rising oversupply in a prolonged industry downturn.
Samsung, the world's top memory chip producer, said it will next year cut its investment in chips, with a similar decision likely on liquid flat-screen production. Its handset division has also been facing off fierce competition from its global rivals.
Nothing has been fixed yet on the technology giant's 2009 investment plan, amid high volatility in financial markets, according to Samsung officials.
"The transfer of management control to Lee Jae-yong, the son of major shareholder Lee Kun-hee, is still an issue that should be settled," a Samsung executive said on condition of anonymity.
Leaders of the group's key units meet every Wednesday to discuss issues surrounding it, but no big decisions are made.
It goes without saying that the former chairman still holds sway.
According to Samsung watchers, it will be senior Lee's decision about whether to relinquish power to his only son.
Jae-yong who has been cleared of any wrong doing in connection with his acquisition of controlling stakes in Samsung companies, is waiting for his father's decision.
"Samsung has not had strong leadership in place since the resignation of Lee Kun-hee," the executive added.
Samsung say chances are unexpectedly high that the company will conduct a large-scale managerial reshuffle in December, perhaps paving the way for the junior Lee to work without difficulty, once he moves in.