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.
Shinsegae chief disgraced by scrapped OpenAI partnership, delayed merger of affiliates
Shinsegae Group Chairman Chung Yong-jin greets guests before his wife's concert in Seoul, Wednesday. Newsis
By Park Jae-hyuk
Retail giant sacks chief strategy officer, strives to convince shareholders
Doubts are growing about Shinsegae Group Chairman Chung Yong-jin’s ability to lead the retail giant, as the group has suffered setbacks in major projects, including the deployment of artificial intelligence (AI) in its businesses and the merger of affiliates.
Last month, Shinsegae Group baffled the market by abruptly canceling its partnership with OpenAI just 11 days after signing a memorandum of understanding with the developer of ChatGPT. Instead, the Korean conglomerate partnered with Reflection AI, another U.S. AI company, citing a “selection and concentration” strategy.
Amid mounting criticism of Shinsegae Group’s hasty decision-making and its lack of thorough technological review, the reversal led to the removal of Shinsegae Property CEO Lim Young-lock from his concurrent post as the group’s chief strategy officer. Lim had signed the agreement with OpenAI Korea Country Manager Kim Kyung-hoon on April 6 for the joint development of an AI-powered e-commerce model with advanced customization features.
Although Shinsegae Group said the personnel change was necessary to allow him to focus on Shinsegae Property-led projects, the dismissal has been widely interpreted as a disciplinary measure holding him responsible for the flawed decision-making process.
“Until we appoint a new chief strategy officer, our business strategy office will continue to serve as the control tower under the chairman’s leadership,” Shinsegae Group said in a press release Wednesday.
Shinsegae Group Chairman Chung Yong-jin, second from left, and Reflection AI CEO Misha Laskin, left, talk with Prime Minister Kim Min-seok at Government Complex Seoul, March 24. Courtesy of Prime Minister's Office
The slow progress in the merger of E-mart and Shinsegae Food is another headache for the group. Shinsegae Group has pushed ahead with the merger since last December, citing the need to streamline decision-making.
Initially, Emart’s tender offer and the subsequent delisting of Shinsegae Food were proposed as ways to make the food company a wholly owned subsidiary of the discount store chain.
However, the plan triggered backlash from minority shareholders of Shinsegae Food, who argued that their shares were undervalued and that the deal would primarily benefit the company’s major shareholders. Chung has effectively been the largest stakeholder in Shinsegae Food, through his 28.85 percent stake in Emart, which in turn holds a 71.18 percent stake in Shinsegae Food.
After the tender offer failed, Emart and Shinsegae Food decided in March to pursue a stock swap to delist the food affiliate.
The decision not only sparked a shareholder protest but also prompted the Financial Supervisory Service to request revisions to the plan, delaying the deal by more than a month.
In response, Shinsegae Food held a meeting with minority shareholders on April 24 and posted a letter from CEO Lim Hyeong-seop on its website on Wednesday.
“We are confident that the proposed stock swap will enhance the long-term value of Shinsegae Food, E-mart and the group as a whole,” Lim said in the letter. “We fully recognize that some shareholders may find this decision unsatisfactory and take this perception very seriously.”
As shareholder protests persist, Shinsegae Food has decided to hold another meeting Thursday.