By Kim Yoo-chul
Staff reporter
Samsung and LG Group, Korea's two global conglomerates, are pitted against each other over a wide spectrum of products from mobile phones, televisions and air conditioners to refrigerators and flat screens.
Nevertheless, rarely have the owners of the two ― Samsung Electronics Chairman Lee Kun-hee and LG Chairman Koo Bon-moo ― been on a direct collision course with each other until now.
The situation calls for both of them to get involved because at stake is the future of their groups.
Two questions are foremost in connection with this new development.
First, does this mean a major change in the personalities of the two leaders? Both are known for preferring to work behind the scenes.
Chairman Lee is known for his "reclusive style" in making any key decisions. It is often said that he works odd hours and many hours nonstop; a characteristic that often describes those who think outside the box.
Koo, who is not as shy of public attention as Lee, but still quiet, rarely standing in front of the public. He puts the greatest emphasis on harmony rather than innovation.
Both Koo and Lee tend to trust their top lieutenants. But Lee tends to be more sweeping in a drastic change of personnel as he showed last year when he removed a large number of aides from the management frontline.
The second reflects on a larger scale, their corporate styles, LG is known for being careful before making changes, while Samsung is a fast adaptor.
"Both understand the importance of competition," Joo Man-soo, an economics professor at Hanyang University said.
"It is obvious that the two chairmen retain their characteristics ― Samsung looks busier than LG. It, of course, remains to be seen which strategy would prove to be better," Joo said.
More time will be necessary to get a clear answer to the two questions.
Right now, other aspects can be used to draw a possible picture.
In terms of goals, both are looking for a new growth engine that they hope will keep them in business for decades to come. Their respective plans entail massive investments.
Samsung, of which Samsung Electronics is its key unit, plans to invest up to 23 trillion won over the next decade in what the group claims will be the new leading industries including healthcare, medical equipment to rechargeable batteries used in hybrid electric cars.
LG has already allocated 20 trillion won to bolster its profile in the highly lucrative ``green’’-related businesses.
The numbers are inspiring as the two just confirmed their plan to spearhead some of the promising sectors ahead of bigger overseas rivals.
Both conglomerates owe their growth to bold and fast investments in hardware-driven segments such as flat-panels, memory chips and televisions.
"The past two decades have been good to us. We need a strategy to keep it that way. Chairman Lee is talking about our new plan with a sense of urgency because he believes that any strong business entity always exists at the risk of going down without preparations for the future. Selling components and hardware-focused products doesn't guarantee prosperity," a top-ranking Samsung executive told The Korea Times.
There is a reason to worry about Samsung's current business portfolios.
Over 60 percent of Samsung's profit comes from volatile and cyclical components, while the situation isn't much different from LG Group. LG sells TVs, home appliances, chemical products and mobile phones.
Samsung is strong with memory chips, LCDs, while it only trails Nokia in mobile phones.
LG Electronics is the world's No. 2 TV maker and the world’s third-biggest mobile phone manufacturer. LG Chem, one of the group's key units, is a leader in batteries for electric vehicles, while LG Display competes with Samsung in the global flat-screen industry.