Daughter rises amid Samsung reshuffle

Competition for chairmanship begins among Samsung scions

By Kim Yoo-chul

The latest management reshuffle by Samsung Group has gained special attention from market investors as it not only suggests the beginning of Samsung’s third-generation era but also signals the prelude of a fierce rivalry among the group’s family scions for the group chairmanship.

Market watchers say that the competition for the chairmanship of the nation’s largest conglomerate has just begun, after the eldest daughter of Samsung Electronics Chairman was promoted two notches to president-level in last week’s management reshuffle.

As expected, the chairman Lee Kun-hee’s only son _ Jae-yong _ was promoted to be the president of Samsung Electronics.

The 42-year-old Lee will keep his role as the chief operating officer (COO) and be tasked to search for future growth engines for the group.

But what’s more interesting about the recent reshuffling was the ``exceptional promotion’’ of the senior Lee’s eldest daughter _ Boo-jin _ to president and CEO of the Hotel Shilla affiliate and the president of the de facto holding company Samsung Everland, according to Samsung officials.

Boo-jin, the 40-year-old, was the only executive, who rose by two notches and Samsung officials say that’s ``exceptional,’’ considering the decades-long cautionary track-record regarding promotions taking place within the nation’s top conglomerate.

Boo-jin joined Samsung four years after Jae-yong joined the company, however, the two are now holding the positions of equal rank.

``It’s not over till it’s over. This simple sentence is telling that the succession procedures have just begun with the onset of a rivalry between the son and daughter,’’ said a Samsung executive, Sunday.

``There had so far been no big debates that the son would eventually take over the chairmanship of Samsung Group. However, the situation has changed with the emergence of Jae-yong’s sister,’’ added the executive, who is directly involved in the matter, on the condition of anonymity.

A senior spokesman at Samsung Communication Team, which handles owner-related issues, declined to comment on the impact of the daughter’s increased presence and power within the conglomerate.

Boo-jin, who has a bachelor’s degree in child and family studies at Yonsei University, joined Samsung in 1995 and was transferred to the Shilla Hotel in 2001, according to the data released by Samsung.

Her career in Samsung communities expanded after she was promoted as the senior executive at the hotel and then Samsung Everland in 2005 and 2009, respectively.

Meritocracy culture

The daughter’s sudden rise to the position of president has been sided with Samsung’s long-time virtue _ meritocracy.

Samsung said Boo-jin has played a key role in expanding the hotel and the group’s resort unit, which is well manifested in the firms’ balance sheets.

Sales of the hotel almost tripled to 1.21 trillion won for all of last year from 415 billion won in 2002. During the third quarter of this year, quarterly sales spiked by 25 percent to 390 billion won year-on-year _ the quarterly record, Samsung said in a regulatory filing.

Very recently, the hotel’s affiliate Shilla Duty Free has struck a landmark agreement to open the world’s first Louis Vuitton airport store at Incheon International Airport by beating its biggest domestic rival Lotte.

``Boo-jin is consistent in yielding visible profits at the involved businesses. Under her strong leadership, the group’s hotel unit was on an expansionary track, while winning against Lotte for the French luxury brand was a critical point for her father to gain much confidence in her,’’ said a Samsung source.

``As far as I know, Boo-jin is well mannered in caring for employees and workers are relaxed to talk with her even on key pending issues,’’ said a Samsung employee.

Unlike the daughter, Jae-yong is still being asked to prove his management capability to completely remove investors’ concerns and to get closer to the chairmanship, officials said.

He was educated at Harvard Business School and has been known as the key figure for the Samsung-Sony venture in flat-screens _ S-LCD _ the light-emitting unit Samsung LED and OLED screen joint venture with Samsung SDI _ Samsung Mobile Display (SMD).

But Jae-yong has yet to hold the helm of any key Samsung businesses after he virtually failed to turn around the group’s former Internet unit _ e-Samsung.

Following the promotion, Lee Kun-hee said Jae-yong will be ``more active’’ in uncovering Samsung’s new growth engines supported by the group’s revived control tower and Samsung’s vice chairman Choi Gee-sung.

He was the former chief customer officer (CCO) and became the COO in December last year.

``Boo-jin’s sudden rise is expected to pose a new threat to Jae-yong,’’ said Lee Jin-woo, a fund manager at KTB Asset Management in Seoul.

``Jae-yong will try harder to prove his leadership ability, while Boo-jin will expand her influence within the group,’’ the Samsung source said. ``In that sense, the real succession process has just begun.’’

Samsung Group’s 67 affiliates generated 220 trillion won or some $193 billion in sales last year, which was equivalent to a fifth of South Korea’s gross domestic product (GDP), according to figures from the Fair Trade Commission (FTC) and the Bank of Korea (BOK).