Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
Will heiresses separate from Samsung empire?
By Baek Byung-yeul
Lee Boo-jin, left, CEO of Hotel Shilla, and Lee Seo-hyun, chairwoman of Samsung Welfare Foundation
By Baek Byung-yeul
After Samsung Group Chairman Lee Kun-hee passed away Sunday, attention has focused on the late chairman's two daughters ― Boo-jin and Seo-hyun ― and whether they will try to separate from Samsung Group with their own independent businesses.
As seen before, Samsung Group founder Lee Byung-chul's children separated from the Samsung empire when their father officially made way for his third son Kun-hee to lead the group. This time, there is speculation that Lee Kun-hee's two daughters could seek separation and independence.
However, industry officials have forecast the two daughters will not pursue the path of their aunts and uncles because it will take time to untangle the conglomerate's web-like ownership structure and it would be better for the daughters to develop their businesses under the umbrella of Samsung, which has established itself as one of the world's most familiar brands.
The country's monopoly regulation and fair trade act has for years listed Samsung Electronics Vice Chairman Lee Jae-yong, the only son of the late chairman, as the chief of Samsung Group. His two sisters hold leadership roles in the group's hotel unit and welfare foundation, respectively.
Currently, the late chairman's first daughter Lee Boo-jin is CEO of the group's hotel and duty free business unit Hotel Shilla, while second daughter Lee Seo-hyun chairs the Samsung Welfare Foundation.
Among the two heiresses, industry officials expect Lee Boo-jin to showcase her ability as CEO while Lee Seo-hyun is estimated to focus on operating the group's welfare foundation as well as Leeum, Samsung Museum of Art, which was co-founded by her mother Hong Ra-hee.
Dubbed by the media as “Little Lee Kun-hee,” Lee Boo-jin has been regarded as a successful businesswoman as she made Hotel Shilla a leader in the hotel and duty free businesses after taking over the unit in 2010.
However, she has to go through a complex process if she wants to set up her own business organization apart from Samsung, as she holds no stake in Hotel Shilla.
Looking into how much of a stake the children of the late chairman have, Lee Jae-yong is in control of the group with a stake in each of its affiliates ― 17.33 percent of shares in Samsung C&T, 9.2 percent in Samsung SDS, 0.7 percent in Samsung Fire and Marine Insurance, 1.54 percent in Samsung Engineering, 0.09 percent in Samsung Electronics and 0.06 percent in Samsung Life Insurance.
Lee Boo-jin and Lee Seo-hyun each hold a 5.5 percent stake in Samsung C&T and 3.9 percent stakes in Samsung SDS, respectively.
To have ownership from outside Samsung Group, Lee Boo-jin needs a stake in Hotel Shilla, but the unit is owned by Samsung Group affiliates ― with Samsung Life holding a 7.43 percent stake, Samsung Electronics with 5.11 percent and Samsung Securities with 3.1 percent ― as well as the National Pension Service which holds a 10.1 percent stake.
Even if she wants to establish her own business group, industry officials forecast Lee Boo-jin wouldn't push forward the plan as the hotel and duty free industries have been hit hard by the COVID-19 pandemic.
Due to the impact, Hotel Shilla announced an operating loss of 67 billion won in the first three months of 2020, the first negative result in the company's history, and recorded an operating loss again in the second quarter. Considering the industry has been struggling with the impact of the pandemic, officials expect Lee Boo-jin will concentrate on stabilizing the businesses.