Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Will return of Samsung chairman's sister lead to changes in governance structure?
Samsung C&T President Lee Seo-hyun
By Park Jae-hyuk
Speculation is growing about potential changes to Samsung’s corporate governance structure, as Lee Seo-hyun, one of the younger sisters of Executive Chairman Lee Jae-yong, has been tasked with devising business strategies for the group’s de facto holding company, according to industry officials, Monday.
The heiress was transferred Friday to Samsung C&T as its president, and will be in charge of overall strategic planning. She had previously been the director of social contribution activities at Samsung Global Research, the conglomerate’s think tank.
Her return to management of Samsung’s trading, construction, fashion and resort subsidiary comes five years after she resigned as the president of its fashion division in December 2018. Samsung said she will continue to head Samsung Welfare Foundation and the Leeum Museum of Art.
“Many investors will likely question this move, since they may question her ability to make strategic decisions that are in the best interests of all minority investors,” said Douglas Kim, an analyst at Smartkarma, a Singapore-based investment research firm. "This major personnel change is likely to be met with high amounts skepticism among many investors, especially among foreign institutional investors."
Samsung C&T’s minority shareholders also raised doubts about her managerial ability.
“After her resignation, Samsung C&T’s fashion business saw a sharp rise in earnings,” one of the minority shareholders said.
Under her leadership, Samsung’s fast fashion brand 8seconds suffered snowballing losses due to fierce competition with foreign brands, such as Uniqlo, Zara and H&M. The Korean brand started making a profit in 2022, after streamlining its management and rebranding.
Beanpole Sport, a sportswear brand she had focused on, went out of business in 2020, as the COVID-19 pandemic prevented sports activities.
Samsung C&T President Lee Seo-hyun, right, and her husband, Samsung Global Research President Kim Jae-youl, approach the funeral altar for Hyosung Group Honorary Chairman Cho Suck-rai at Severance Hospital in Seoul, Saturday. Joint Press Corps
Given that she is not only tasked with establishing strategies for the fashion business, but also for the trading, construction and resort businesses, some industry officials expect her to devise long-term plans for Samsung C&T, which could be difficult for professional managers who tend to focus more on their short-term objectives.
“Based on her experience at Samsung C&T and Cheil Worldwide and her know-how in the cultural business and social contributions, Lee is expected to contribute to enhance Samsung C&T’s brand competitiveness,” Samsung said in a statement.
There is speculation that her return could be a preparatory step for a three-way split of Samsung affiliates for the executive chairman and his two younger sisters. However, excessive inheritance taxes imposed on them in 2020 after the death of their father, Lee Kun-hee, have made it difficult for the owner family to pursue any spinoffs in the near future.
This is because the siblings hold their shares in multiple Samsung affiliates and receive dividends from them, some of which are used to pay back the inheritance tax payments and maintain the owner family's control of the group.
“The sudden comeback of Lee Seo-hyun to the forefront of Samsung’s management implies potential changes in the dynamics of separating Samsung’s conglomerate,” said Park Sang-hyun, another Smartkarma analyst. “Her return to Samsung C&T might not just be a simple comeback — it could be seen as a setup for some big changes within the company.”
The heiress declined to answer questions from reporters about her return to management on Saturday, while visiting the funeral altar for Hyosung Group Honorary Chairman Cho Suck-rai.