Samsung’s Lee: tainted titan who built a global tech giant

In this news, we discuss the Samsung’s Lee: tainted titan who built a global tech giant.

SEOUL (Reuters) – In February 1993, five years after taking over from his father from South Korean group Samsung, Lee Kun-hee, 51, was frustrated at not making his mark.

He summoned a group of Samsung Electronics 005930.KS executives to a Best Buy store in Los Angeles for a reality test on the Samsung brand. Covered in dust, a Samsung TV sat on a corner shelf priced almost $ 100 cheaper than a competing Sony Corp 6758.T model.

After a tense nine-hour follow-up meeting, Lee initiated a strategic shift at Samsung – to gain market share through quality, not quantity.

Lee, who died Sunday at age 78 after being hospitalized for a heart attack in 2014, was driven by a constant sense of crisis, which he instilled in his management teams to drive change and fight complacency. In the mid-1990s, Lee personally recalled about $ 50 million worth of shoddy cellphones and fax machines, and set them on fire.

This focus on the crisis, and its often abrasive manner, helped Lee develop his father Lee Byung-chull’s noodle trading business into a sprawling trading empire with assets worth 424 trillion won (375 billion) in May 2020 at dozens of affiliates ranging from electronics and insurance to construction and shipbuilding.

Samsung Electronics has grown from a second-tier TV maker to the world’s largest tech company by revenue – seeing Japanese brands Sony, Sharp Corp 6753.T and Panasonic Corp 6752.T in chips, TVs and screens; end Nokia Oyj’s NOK1V.HE handset supremacy and beat Apple Inc. AAPL.O in smartphones.

In a 1997 essay, Lee recalled his frustration with management inertia. “The external business environment was not good… but there was no sense of anxiety within the organization, and everyone seemed eaten up with vanity… I needed to tighten them up a bit and I have repeatedly reminded managers of the need to have the feeling of crisis. “

In 2013, Forbes named Lee the second most powerful South Korean, just behind United Nations Secretary-General Ban Ki-moon.

Feared and revered

Four months after the Los Angeles meeting, Lee called his lieutenants into the conference room of a Frankfurt hotel, where he outlined his plan for “new leadership,” urging leaders to “change everything except your wife and your children ”.

The leadership meetings turned out to be brutal, often lasting until 10 a.m., with attendees even afraid to drink water because they didn’t want to have to interrupt Lee’s flow when visiting the restroom.

Lee’s business acumen has made him the subject of endless fascination and speculation in Korea, but he and the empire he built have also been vilified by critics and activist shareholders for having exercised such economic weight, hierarchical and opaque governance and questionable transfers of family wealth.

In 2008, Lee was charged with running a political slush fund and helping his children buy cheap Samsung stock. Prosecutors did not prove either count, but Lee was convicted of tax evasion and embezzlement. He apologized and resigned, only to return within two years of a presidential pardon.

He had since kept a low profile and delegated to an army of cadres, while promoting his son, Jay Y. Lee, to vice president, a post of preparation for the eventual transfer of power.

As his health deteriorated – Lee needed help walking and was vulnerable to respiratory illness after treatment for lung cancer – he was less present at Samsung headquarters, spending long winter vacations in Japan or Hawaii.

But his hold on the group has remained intact. Whenever he traveled overseas, at least four of Samsung’s top executives, along with the company’s crew and security, were at the airport to watch him go.

At Samsung’s Human Resources Development Center, the tens of thousands of employees attending the training sessions pay a silent vigil in front of a mock-up of the drab conference room at the Frankfurt hotel – with furniture specially imported from Germany . As most of Samsung’s employees are in their twenties and thirties and have not experienced Lee’s managerial climax firsthand, this tribute serves to remind them of the need to “think about the crisis,” several people said. which were formed at the center.

EXHIBITION IN JAPAN

Lee was born in 1942 in the South Korean village of Uiryeong, the third son of the founder of Samsung. He was sent to Japan at the age of 11, just after the end of the Korean War. His father wanted his sons to learn how Japan was rebuilding itself from the ashes of World War II.

He admitted to being a loner and struggled to make friends when he returned home to a country torn by anti-Japanese sentiment. He returned to Japan to study economics at Waseda University, then business administration at George Washington University in the United States.

His early exposure to cutting edge technology from Japan led him to lay the foundation for Samsung Electronics by forming alliances with companies like Sanyo and adopting chip and television manufacturing technologies.

Lee began his career at Samsung in broadcasting, before becoming the group’s chairman in 1987, breaking away from the traditional Confucian practice of having the eldest son taking the reins. His older brother, Lee Maeng-hee, was originally chosen to run Samsung in 1967 when his father retired, but his aggressive management style caused friction with the founder’s confidants, according to several Samsung books.

The second son, Lee Chang-hee, severed family ties by telling the presidential office that his father had a million-dollar slush fund overseas.

Lee senior exiled Chang-hee to the United States and himself returned as president. In 1976, diagnosed with cancer, he passed the business on to Kun-hee. Chang-hee died in 1991.

Kun-hee’s hunched posture, due to a traffic accident, soft voice, round eyes, and often bewildered expression were atypical for such a powerful character. Married to Hong Ra-hee, who runs a Samsung-affiliated art gallery called Leeum – a combination of Lee and a museum – Lee had a son and three daughters.

Her youngest daughter died in New York in 2005, which Samsung said in a car crash, but media said it was suicide.

Lee had been a member of the International Olympic Committee between 1996 and 2017.

($ 1 = 1,127.9500 won)

Reporting by Miyoung Kim; additional reports from Se Young Lee and Joyce Lee; Editing by Ian Geoghegan and William Mallard

Original © Thomson Reuters

Originally posted 2020-10-24 19:36:12.

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