Samsung leader rejects profit-sharing scheme

By Kim Yoo-chul

Lee Kun-hee, chairman of Samsung Electronics, rejected Thursday a proposal by former Prime Minister Chung Un-chan to put greater pressure on large businesses to share their profits with small- and medium sized companies.

``I don’t know whether it is used in a socialist country, a capitalist country or a communist nation. It’s out of focus whether or not the idea is positive or negative,” the 69-year-old tycoon said in reference to the controversial proposal of profit sharing.

“But I’ve never heard of it, though I’ve studied economics.’’

Lee made the remarks, which were taken as a rare show of direct criticism, during his meeting with a group of reporters before attending the meeting of conglomerate leaders hosted by the Federation of Korean Industries (FKI) _ the big business lobby.

This was the first time in four years he showed up for such a meeting, which was held at the Grand Hyatt Hotel in downtown Seoul.

Profit sharing is being prompted by Chung, who now heads a blue-ribbon commission on shared growth for large and small companies.

He says that the formula will, “voluntarily” have big corporations share profits that are made beyond their target to help smaller firms.

The sharing of profits would be made in the form of donations from big conglomerates to help support smaller firms develop technologies, and strengthen their financial soundness.

But obviously, big businesses are looking at Chung’s formula as a greater degree of state intervention, pushing them to go a step further from their current practice of creating individual funds to support subcontractors or giving them cash for their contracts on an immediate basis.

President Lee Myung-bak has also called for big companies to make greater efforts to share their profits; but didn’t go as far as making it compulsory.

Chung is currently drumming up corporate support for his profit-sharing formula.

The 64-year-old former prime minister pushed his proposal to Hyundai Motor Chairman Chung Mong-koo, although it is not immediately known how he responded.

Already, the political circles are in an uproar over the proposal from the former professor of economics at Seoul National University. Critics in the ruling Grand National Party have attacked Chung as being a leftist fundamentalist.

An executive at the Samsung Communications Team told The Korea Times, “Samsung will fully cooperate with the government for balanced growth with small- and medium-enterprises,” pointing out that Chung’s profit-sharing formula was not an official government stance.

Meanwhile, Lee was not entirely happy with the current government’s economic policies.

``Our economy has been growing,” Lee said, when asked to assess the policies. “It is better than the previous 10 years (under two liberal governments). It is not as bad as flunking.”

Regarding oil prices, he said: ``We need to save and make more money, that’s the only way.’’

Separately, the FKI said after the meeting of corporate chieftains that a new goal was set to make all-out efforts to increase the country’s growth domestic product per capita to $100,000 by 2030 with an annual growth of 5 percent so as to make Korea the world’s 10th-biggest economy from its current 15th place.