KoreaToday Korea Inc. Undergoing Paradigm Change
Generational Shift at Top Taking Place Amid Global Turbulence
By Kim Yoo-chul
Staff Reporter
Korean Inc. is in upheaval, with keywords being a generational shift.
``Korean conglomerates will promote young and tech-oriented executives into critical posts for speedy and efficient decisions,'' said a Samsung Electronics spokesman.
Samsung Group last week accepted the ``retirement'' of Hwang Chang-gyu and Lee Ki-tae, the electronics giant's two icons.
Hwang had worked as the head of Samsung's semiconductor unit from 2000 during its years of glory and created ``Hwang's Law'' in chip development. He was sidelined from frontline management last March.
Lee Ki-tae, who also contributed to Samsung's mobile phone brand achieving global status, is also out.
Their retirement signifies a reorientation on its priority from a traditional emphasis of massive investment and bulky external growth toward laying the groundwork for future growth, Samsung officials said.
``Our model is Apple, a creative and market-focused player,'' a high-ranking Samsung executive said.
Samsung's future lies with Lee Jae-yong, the only son of the group's former Chairman Lee Kun-hee, according to industry watchers.
The junior Lee's top lieutenant Choi Gee-sung has moved to form a two-top system at Samsung Electronics with Vice Chairman Lee Yoon-woo.
The company has restructured itself into two operating divisions ― one focused on consumer products such as TV sets and mobile phones and the other on components such as memory chips and flat-screens.
For the past two years, Samsung operated four main divisions ― memory chips, liquid crystal displays, digital media (consumer gadgets) and mobile phones.
The 57-year-old Choi was the president of Samsung's mobile phone division, and under his leadership Samsung beat Motorola to become the world's second-biggest handset maker and narrowed the market gap with industry leader Nokia.
When he was in charge of the company's television business, Samsung rose to become the world's top producer of TV sets taking over from Sony.
``Yes, the reshuffle may be the groundwork for group heir apparent Lee Jae-yong,'' another Samsung spokesman said.
``The company's change of generation is happening as Samsung is facing its biggest challenge in a decade,'' the spokesman added.
Samsung Electronics has also cut the number of promotions of under CEO-level executives by 22 percent this year compared to 2008, at the same time it is forecast to post the first operating loss in seven years as the deepening global credit crunch dampened demand for consumer electronics.
Samsung is the world's biggest maker of memory chips and flat-screens, while it ranks as No. 2 in mobile phones. The memory and flat-panel businesses are subject to cyclical ups and downs; meaning demand is a critical factor in deciding profits.
It has 63 affiliates with 140,000 workers employed in Korea, and accounted for some 20 percent of domestic exports, last year.
POSCO, KT, LG on Same Path
Steel giant POSCO is making changes of its own.
``As Lee decided to step down to end his 40-year tour of duty with POSCO, we are also hoping for a leader with a young, marketing and tech-based personality as his successor,'' spokesman Kim Dong-wan said.
POSCO sources said the current CEO Yoon Suk-man has been considered as a strong candidate for the ``post-Lee'' era in a power shift for the company, given his proven track record in marketing and sales.
The new chief executive will face highly volatile trading conditions, as the company forecasts the first quarter to deliver the worst results of 2009, a view shared by many analysts.
POSCO, which competes with Nippon Steel, warned last week of lower sales and output in 2009 and the worst January performance in its 40-year history as steel demand has continued to become weaker due to the bad economy, despite massive global production cutbacks.
``POSCO is expected to continue the effort of generation shift even under mid- and low-ranking officials,'' a high-ranking POSCO official said, asking not to be identified.
KT, the nation's leading landline operator, is not an exception. Since Lee Suk-chae took office a few days ago, three marketing experts have been hired from its affiliate KT Freetel.
In a recent management reshuffle, KT promoted young- and performance-oriented executives to responsible positions. The company is planning to send some 3,000 employees ― half of the total workforce ― to new fields, while slashing the number of executives at its headquarters.
Lee's appointment came after his predecessor Nam Joong-soo resigned in early November following allegations that he took kickbacks from suppliers in return for buying their products.
``The former minister of information and communication under the Kim Young-sam administration, has a reputation for stubbornness and bold decision making, raising hopes for a drastic change in our corporate image,'' a KT spokesman said.
SK Group, headed by Chey Tae-won, carried out a sweeping shake-up on Dec. 19, replacing chief executives of its two flagship units, SK Energy and SK Telecom, and CEOs of four other affiliates ― SK Networks, SK C&C, SK Engineering & Construction and SK Shipping.
The change is seen by observers as a move to increase the company's global competitiveness.
Jung Man-won, former CEO of SK Networks, was named to replace Kim Shin-bae as CEO of SK Telecom ― the nation's top mobile operator.
Koo Ja-yong, president of the planning and technology division at SK Energy, was also promoted to new CEO of the nation's top oil refiner.
``By hiring more performance-oriented personnel or promoting executives for creative thinking, Korea's top-tier conglomerates hope to tackle rising uncertainties in the global market,'' said Chu In-ki, a professor at Yonsei University.
``In such terms, the generation shift and massive reshuffling will boost transparency in management and strengthen competitiveness ahead of their overseas rivals,'' Chu added.