[Chairman Lee Kun-hee Passes Away] Samsung Also Begins 3rd Generation Management... Business World Undergoing Generational Change

[Asia Economy Reporter Hwang Yoon-joo] With the passing of Samsung Group Chairman Lee Kun-hee on the 25th, Vice Chairman Lee Jae-yong's third-generation management has officially begun. This marks the start of the 3rd and 4th generation eras for all four major domestic conglomerates: Samsung Group, Hyundai Motor Group, SK Group, and LG Group. In order to swiftly respond to uncertain management environments such as the novel coronavirus disease (COVID-19) and the US-China trade dispute, attention is focused on whether the bold leadership of young heads of conglomerates emphasizing 'innovation' and 'practicality' will shine.

◆ Samsung and Hyundai Motor, with third-generation management in full swing, emphasize 'innovation' and respond agilely to future new industries

Samsung Group, entering the Lee Jae-yong era, appears to focus on 'maintaining top fields while boldly challenging new businesses.' Samsung Electronics developed the 64-megabit DRAM in 1984 through a 'super-gap' strategy and bold investment, and after rising to number one in the DRAM market in 1992, it has maintained the world's number one market share in DRAM for nearly 30 years.

What Vice Chairman Lee is focusing on as a future growth engine is the system semiconductor sector centered on foundries. System semiconductors are essential components related to mobility such as autonomous driving and artificial intelligence (AI). This is the background behind Samsung's announcement of 'Semiconductor Vision 2030,' expressing its determination to become number one in the system semiconductor sector as well.

To this end, Samsung Group has decided to invest a total of 133 trillion won in the system semiconductor sector by 2030, allocating 73 trillion won for research and development and 60 trillion won for production infrastructure. Vice Chairman Lee's recent visit to the headquarters of ASML in the Netherlands is also interpreted as a move to expand investment in the system semiconductor sector and not lose global leadership.

The business community is paying attention to the timing of Vice Chairman Lee's succession to the chairman position following Chairman Lee's passing. Although Vice Chairman Lee has effectively led Samsung since Chairman Lee collapsed in 2014, the business community is also focused on the method and timing of future governance restructuring.

Hyundai Motor Group officially launched the third-generation Chairman Chung Eui-sun system after the 14th. Since his inauguration, Chairman Chung has accelerated the business transformation centered on mobility that he had been pursuing. Chairman Chung has expressed his intention to develop Hyundai Motor Group into a 'smart mobility solutions' company. At the beginning of this year’s CES, he announced a strategic partnership with Uber in the urban air mobility (UAM) sector and declared plans to commercialize UAM by 2028, attracting global automotive industry attention.

◆ Major conglomerates begin 3rd and 4th generation management... Overcoming COVID-19 crisis with young blood

Major domestic conglomerates have already started 3rd and 4th generation management. Earlier this year, with the passing of Lotte Group Chairman Shin Kyuk-ho, the first generation of business leaders who led Korea's industrialization have all passed into history.

In 2018, LG Group Chairman Koo Kwang-mo became the head of the fourth-largest conglomerate at the young age of 40 following the passing of his father, former Chairman Koo Bon-moo. Since Chairman Koo's inauguration, LG Group has been evaluated as bolder than before. A representative example is LG Electronics actively taking legal action against companies infringing on its patents. Not only LG Electronics but also LG Chem is currently engaged in a lawsuit against SK Innovation over trade secret infringement related to electric vehicle batteries. LG Household & Health Care also filed a trademark lawsuit against Aekyung Industrial over toothpaste trademarks. As the domestic conglomerate with the largest research and development (R&D) investment scale, this is interpreted as a move to protect the company's intellectual property (IP) and maintain technological gaps in industries leading the market.

GS Group saw Honorary Chairman Huh Chang-soo step down at the end of last year, with Chairman Huh Tae-soo taking office. Chairman Huh presented 'innovation' as his first management theme after inauguration. He has continuously expressed his determination to create new growth engines amid challenging management environments by stating, "We will use the innovation methodologies of advanced Silicon Valley companies as the driving force for innovation."

Hanjin Group has been led by Chairman Cho Won-tae, son of the late former Chairman Cho Yang-ho, since April last year. After his inauguration, Chairman Cho strengthened communication efforts and achieved better-than-expected performance despite the COVID-19 shock. When the first-quarter results this year outperformed market consensus, he expressed gratitude, saying, "This was possible because there were executives and employees who fully understood the company's difficult situation and willingly participated in overcoming the crisis through concessions and sacrifices." During the peak of the COVID-19 crisis last February, he chartered a plane for Korean evacuees from Wuhan, China, and volunteered to board it himself.

Hanwha Group promoted Kim Dong-kwan, eldest son of Chairman Kim Seung-yeon, to CEO of Hanwha Solutions last month. Kim joined Hanwha in 2010, was promoted to executive director in 2015, and to vice president in 2019. He then advanced to president within nine months, taking the lead in management.

A business community official said, "The trend of younger heads and executives is a natural flow to respond to rapidly changing management environments such as the digital and mobile era," adding, "The innovation competition among major groups that have undergone generational change will become more prominent."