[ROUNDTABLE] 'Sustainability can be achieved through transparent management'

Participants of The Korea Times roundtable on corporate sustainability pose at The Korea Times' office in central Seoul, Sept. 15. From left are Korean-German Chamber of Commerce and Industry (KGCCI) President and CEO Martin Henkelmann, Merck Korea Managing Director WooKyu Kim, E. Merck KG Executive Board and Family Board Chairman Frank Stangenberg-Haverkamp, Samsung Biologics President and CEO John Rim and The Korea Times President-Publisher Oh Young-jin. Korea Times photo by Choi Jin-woo

Leaders of Merck, Samsung Biologics share insights on how to achieve longevity in business

By Baek Byung-yeul

Frank Stangenberg-Haverkamp, chairman of the Executive Board and Family Board of E. Merck KG, speaks during The Korea Times roundtable at the newspaper's headquarters in Seoul, Sept. 15. Korea Times photo by Choi Jin-woo

Making a company sustainable has always been a top priority for entrepreneurs. But how to achieve that long-term goal has always been an elusive target for many business owners and leaders.

At a time when environmental, social and governance (ESG) values are being increasingly emphasized, The Korea Times hosted a roundtable conference with highly recognized business leaders to share their insights on the continuous growth of an organization from a long-term perspective.

Four leaders took part in the roundtable meeting ― E. Merck KG Executive Board and Family Board Chairman Frank Stangenberg-Haverkamp, Samsung Biologics President and CEO John Rim, Korean-German Chamber of Commerce and Industry (KGCCI) President and CEO Martin Henkelmann and Merck Korea Managing Director Kim WooKyu.

Oh Young-jin, president-publisher of The Korea Times, asked the chairman of Merck's holding company, E. Merck KG, how the German-based company, established itself as one of the world's leading companies by focusing on life science, healthcare technology and electronics businesses.

The Samsung Biologics CEO was asked about how the Samsung Group subsidiary, founded in 2011, became the largest global contract-based drug producer in such a short time and what the company is doing for sustainable growth.

Established in 1668, Merck has been retaining a well-balanced governance structure that separates management and ownership, which has become a great example for many family-owned conglomerates in Korea called "chaebol."

Stangenberg-Haverkamp said his ancestors realized that the family management system could not guarantee sustainable growth of the organization and began recruiting people outside of its management in the early 20th century.

Now, E. Merck KG, a holding company of Merck comprised of family members, holds around 70 percent of the total capital of Merck and the remaining 30 percent of the capital is issued in shares and traded publicly.

He added that it is vital to create an effective system of interaction between management and corporate governance.

John Rim, president and CEO of Samsung Biologics, speaks during The Korea Times roundtable at the newspaper's headquarters in Seoul, Sept. 15. Korea Times photo by Choi Jin-woo

John Rim, who became president and CEO of Samsung Biologics in 2020, said the key to the success of the drug manufacturer is to attract quality employees, provide them with the best infrastructure and try to communicate with them transparently.

He added that he has always told his employees not to be afraid of making mistakes and encouraged them to move on from them, because an organization cannot grow without making errors.

Merck and Samsung also talked about their collaborations in the life science sector. Since 2014, Merck has been partnering with Samsung Biologics by signing a strategic alliance in the biopharmaceutical business. The alliance was intended to encompass a long-term supply agreement in which Merck's life science business provides raw materials for biopharmaceutical manufacturing.

In 2017, their agreement was extended. The alliance would accelerate process development and clinical material production at small biotech start-ups focusing on novel drug development for which Samsung Biologics acts as a contract developer and manufacturer. Currently, Merck is supplying products and services for bio manufacturing to Samsung Biologics.

The following is an excerpt from the roundtable.

Participants of The Korea Times roundtable conference discuss how to achieve an organization's sustainability at the newspaper's headquarters in Seoul, Sept. 15. From front left, clockwise, are Korean-German Chamber of Commerce and Industry (KGCCI) President and CEO Martin Henkelmann, The Korea Times President-Publisher Oh Young-jin, Merck Korea Managing Director WooKyu Kim, E. Merck KG Executive Board and Family Board Chairman Frank Stangenberg-Haverkamp and Samsung Biologics President and CEO John Rim. Korea Times photo by Choi Jin-woo

Q: To Dr. Stangenberg-Haverkamp, conventional wisdom has it that mom and pop stores are a family business. But yours is a family business and also a global conglomerate that has evolved and thrived for over 350 years. How does your family's visions help its longevity and prosperity?

Stangenberg-Haverkamp (Haverkamp from now on): First, basically it's very simple. The owners, my family, they're very, very modest. They're working people so all they want is for the company to thrive and they don't see themselves as shareholders. This is a service trustees for the business to hand on to the next generation. I'm the 11th generation but the 13th generation is already in.

Secondly, my forebears realized at a very early stage already in 1920 that they could not run the company on their own. If you look into other cultures like China, or India, for example, family businesses are always run by family members. But it's impossible for a highly sophisticated developed company to produce so many knowledgeable family members. That is why, since 1920, our sophisticated governance model has empowered non-family management to help run and grow the company.

Q: When you're actually the owner of the company, it's more like you do whatever you want. But when you're a trustee, it's different because it is kind of a duty to pass the company to the next generation. What is the difference between being an owner and trustee in terms of mentality?

Haverkamp: Ownership means that you have got the free ability to do with your wealth, and that was never in the family constitution because always the family stays together. And the value of it is to keep it within the family.

And you don't sell it to enjoy yourself. So many people don't understand why we don't have Ferraris, yachts and private planes. We don't have that. All our family members are ordinary working people, like farmers, artists, architects and businesspeople. It's because ethics was very deeply rooted in the family. Well, that can be maintained for the next generations. I don't know. Maybe not changing but up to now it goes.

Q: President John Rim, what's the secret to the success of you and Samsung Biologics?

Rim: I would say my success is having great people work for me. So that's really been a mark for Samsung Biologics and for the Samsung Group. We're able to leverage the Samsung organization in the DNA within the Samsung Group, so we've been able to really have great employees from the Samsung Group organization joining Samsung Biologics when we started. We have great people, a lot of the DNA in terms of focus on quality, focus on long term shareholder value, focus on speed, focus on excellence and operational excellence. Those are the things that I think made us successful.

A lot of it has to do with having great people that work extremely hard to really focus on innovation, growth and customer satisfaction. And having great partners like Merck. So I think having all those really made Samsung Biologics privileged to work, so I would say the main factor is really having great people.

Q: Samsung is a very traditional Korean company in many ways, especially in terms of corporate governance. Has the tendency in terms of the governance made you less competitive?

Rim: No, actually I had the privilege to work with multiple organizations in my career. I started out in America, but worked for Roche, which is a European Swiss company with a long tradition of family ownership and I also worked for a Japanese company. When working in all of those different environments, and certainly Samsung has its unique capabilities and structure, but I don't think it's that different than many other organizations in terms of governance, in terms of how we do things. I think the real core value is having a company focused on shareholders. We're very focused on patients…to produce critical medicines for patients in need, like COVID-19, cancer and HIV. So those are very, very important things. The governance has never been any challenge for Samsung, or any of the companies that I've worked for.

Q: Samsung Biologics was designated as one of Samsung's future growth engines and the decision was made by the owner family. Do you think that Samsung's structure helped your company's rapid growth?

Rim: I think it had a lot to do with the inception of the company and also the rapid growth. Very few companies can start large-scale manufacturing without significant investment. And those investments could be billions. And shareholders and fact that the company needs to be very, very patient because, as you know, while we build facilities very quickly, it does take three to four years. For most companies to do that, it takes some additional time to actually ramp that facility up. And for many shareholders, particularly I think public companies in the U.S. that are much more focused on quarters or a year, that may be a very, very big challenge.

I think, because Samsung Group has the financial wherewithal and the longevity, and is also focused on the long term. That's a very, very unique strength. Also, we could have called the company anything, but with the Samsung brand name and image, you have instant recognition. That gave us credibility to really participate in the biologics, CDMO and biosimilar businesses.

Martin Henkelmann, president and CEO of the Korean-German Chamber of Commerce and Industry (KGCCI)

Q: To Martin Henkelmann, is there some knowhow that a German company gives to Korean companies to help companies here thrive more?

Henkelmann: The team that has a skilled workforce is so important. That's something which we can see all over the world. Competition for talent in the companies is one of the biggest challenges.

To make the country stronger, there should be more vocational training. It's a topic we always bring up. We need highly-skilled workers, but not everybody needs to have received several bachelor's and master's degrees in university.

Q: To Kim, is there any difference between working for Merck and for other companies?
Kim: Other companies are more focused on short-term success and are always pushed to deliver the financial goals without having too much of a long- term vision. But I see a lot of differences in Merck, because the strategy of the company is really looking into long-term success of the business.

Coincidentally, Merck is investing a lot in Korea. The company has three well-structured business pillars ― we have healthcare, life science and electronics businesses ― and all these areas are very well aligned with the focuses of the Korean government's strategy.

WooKyu Kim, managing director of Merck Korea

I also see a lot of investment for the people. I shared good training programs that the company is offering and really enjoyed learning about senior management. So, what is the difference? Being part of Merck, they focus on people development.

Q: To John Rim, you already mentioned how successful you are in attracting talented people and retaining them is the key to success. Nowadays, the new generation is different from the old generation as they are more open to speaking up about their ideas to seniors. How do you address this challenge, especially considering the average age of your workforce is very young?

Rim: We're a young company. Our employee base is very young. Our average age is 29 and the average tenure has been approximately about four years.

We do have a lot of MZ generation employees. I think if you come to Samsung Biologics, it feels more like a college campus. We provide free meals and one of the best things is the best food you ever had. Three meals a day plus snacks. We also have amenities. It's very, very similar across many high tech companies. We have a medical infrastructure, a fitness center and a lot of that infrastructure on site.

So a lot of the things that you would think about being high tech and innovative and very MZ oriented. We also have very open transparent communication between management and employees in terms of what they're curious about how they're compensated.

Oh Young-jin, president-publisher of The Korea Times

Q: Are you interacting with the employees who are on the bottom rung of the ladder?

Rim: Yes. I walk around. I mean, that's the best way to interact with employees. You walk around and talk to folks about what are some of the challenges they have and how can we improve. I'm not saying we're perfect, but there are opportunities for improvement all the time and we're focused on how we can make a better environment. Ultimately, a better environment that is focused will also make employees happy, and employees being happier will lead to better employees.

Q: How can you create a company's culture and influence the mentality of the workforce?

Rim: I've always encouraged folks in my organization to think that risk taking is good. Sometimes we make mistakes, but that's fine. That's how you learn and you go on from there. But some folks particularly have concerns that 'I made a mistake and there'll be repercussions.' But, there are no repercussions.

I've always said, hey, there's a problem in the operations and I'm the first one who would say, hey, look, that's my responsibility. I'm accountable for that. And you go on. I think that's the kind of culture that we're trying to develop.

Who is Frank Stangenberg-Haverkamp?

Born in 1948 in Dorsten, Germany, Stangenberg-Haverkamp has been serving as chairman of the Executive Board and Family Board of E. Merck KG, a separate family holding company of Merck KGaA, which has achieved tremendous business growth, developing successfully and growing over 354 years through 13 generations of family ownership ― from a small pharmacy to a global science and technology company.

Following his German university entrance qualification, he served with the German Air Force, which he left as lieutenant. At the University of Freiburg, he studied economics and economic history. After completing his studies, he worked at Commerzbank, Baring Brothers and Hambros in London.

In 1984, he was elected to the Board of Partners of E. Merck KG and has been the chairman of the board since 2004. In January 2014, he was elected as the chairman of the Executive Board and the Family Board of E. Merck KG.

Who is John Rim?

John Rim has been leading Samsung Biologics, the world's largest contract drug maker, as president and CEO since December 2020.

He earned his bachelor's degree at Columbia University, majoring chemical engineering and received a master's degree in chemical engineering from Stanford University. He also earned an MBA degree from the Kellogg School of Northwestern University.

Rim served as vice president and CFO of global manufacturing, supply chain and outsourcing for Genentech, which now became a subsidiary of Roche. He also served as vice president of global product development procurement and CFO of global product development at global pharmaceutical company Roche.

He joined Samsung Biologics in September 2018 as an executive vice president to oversee the operation of the company's third plant, the world's largest biopharmaceutical factory, and was recognized for the achievements in securing contracts and early stabilization of the plant even during the COVID-19 pandemic.