Returning Home Today After On-Site Management in Vietnam... Next Up: Business Trip to Japan
Increased Judicial Risks Pose Challenges to Management
[Asia Economy reporters Changhwan Lee and Dongwoo Lee] Lee Jae-yong, Vice Chairman of Samsung Electronics, who returned from a business trip to Vietnam, is expected to soon embark on a business trip to Japan as well. Although judicial risks remain, it is analyzed that management moves to prepare for the post-COVID-19 era are accelerating.
Vice Chairman Lee completed his 4-night, 5-day schedule in Vietnam and returned through Gimpo Airport around 7 a.m. on the 23rd. He is expected to head to Japan following his Vietnam trip. He said, "I need to go to Japan once within the year to meet customers," adding, "However, nothing has been decided yet."
Earlier, on the 10th of last month, Lee met with Koji Domita, the Japanese Ambassador to Korea, to discuss issues such as entry restrictions for businesspeople between the two countries. Since then, from the 8th, South Korea and Japan have started a special entry procedure (fast track) exempting businesspeople from quarantine measures.
In Japan, Lee is expected to meet with executives from companies related to semiconductor core materials and 5th generation (5G) mobile communications, which are facing difficulties due to Japan's export regulations.
Lee departed for Hanoi, Vietnam, on the 19th. This was just five days after returning from a six-day business trip to Europe on the 14th.
On the 20th and 21st, Lee visited Samsung's complex sites located in Bac Ninh and Thai Nguyen near Hanoi, Vietnam, to receive business status reports and inspect smartphone and display production plants. Vietnam is Samsung Electronics' largest mobile phone production base, producing about half of the smartphones Samsung sells.
Lee also visited the construction site of the 'Vietnam Research and Development (R&D) Center,' whose groundbreaking ceremony was canceled in February, to receive updates on the construction progress. The R&D center being built in Hanoi is a building with three underground floors, 16 above-ground floors, and a total floor area of about 80,000 square meters, making it the largest Samsung Electronics research complex in Southeast Asia.
In the future, about 3,000 R&D personnel specializing in software and hardware related to mobile devices such as smartphones and tablets will work here. It is scheduled to be completed by the end of 2022.
Vice Chairman Lee Jae-yong of Samsung Electronics is seen inspecting the smartphone manufacturing plant and other facilities at the Samsung complex near Hanoi, Vietnam, on the 20th and 21st.
◆Vietnam Prime Minister Repeatedly Requests Construction of Semiconductor Factory
On the evening of the 20th, Lee had a private meeting with Nguyen Xuan Phuc, Prime Minister of Vietnam. Prime Minister Phuc met with Lee again about a year after the Korea-ASEAN Special Summit in November last year. He once again requested Samsung to build a semiconductor factory in Vietnam. Prime Minister Phuc has consistently requested Samsung Electronics' semiconductor factory investment whenever meeting with Lee.
However, the atmosphere inside and outside Samsung suggests that the possibility of Samsung Electronics proceeding with semiconductor factory investment in Vietnam under the current circumstances is low. This is because Samsung has already established a large semiconductor production line in China and is expanding large-scale lines in Pyeongtaek and Hwaseong. On the way back, Lee did not respond to reporters' questions about whether there are plans for local semiconductor investment as requested by Prime Minister Phuc.
After returning, Lee is expected to plan his next business trip while also preparing for trials. The retrial of the 'Choi Soon-sil state affairs manipulation' case will resume on the 26th.
The retrial was suspended for nine months after the special prosecutor team led by Park Young-soo filed a motion for disqualification in January, citing concerns that the presiding judge might conduct an unfair trial. However, the high court and the Supreme Court recently dismissed the prosecution's requests, allowing the trial to resume.
Although the 26th is a preparatory hearing date, it is highly likely that the court will issue a summons for Lee, making it an exceptional case for him to appear in person. Separately, on the 22nd, the first trial date related to allegations of management succession was held, and Lee's side denied the prosecution's charges.
The business community is concerned about the increasing judicial risks surrounding Lee and Samsung amid the uncertain management environment caused by COVID-19. A business official said, "In a very difficult global business environment due to economic recession and COVID-19, judicial risks are a significant burden for Samsung," adding, "Especially, they act as a deterrent to large-scale investments or mergers and acquisitions (M&A) that require the owner's decision."
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