[News Figures] Brother's Appointment as Samsung Chairman... What About Sister's Underperformance and Seohyun?

[Image source=Yonhap News]

[Asia Economy Intern Reporter Song Hyundo] On the 25th, marking the 2nd anniversary of the passing of the late Lee Kun-hee, former chairman of Samsung Group, the Samsung family gathered in one place. The memorial service held at the family ancestral grave in Suwon, Gyeonggi Province was attended by the three Samsung siblings: Lee Jae-yong, the eldest son and current chairman of Samsung Electronics; Lee Boo-jin, the eldest daughter and president of Hotel Shilla; and Lee Seo-hyun, the second daughter and chairperson of the Samsung Welfare Foundation.

On the day of the memorial service, Chairman Lee told reporters, "It is desperate, the reality before us is severe and the market is ruthless," and then presented Samsung's future vision, reaffirming his determination for the 'New Samsung.' Two days later, on the 27th, he was inaugurated as chairman of Samsung Electronics.

◆ Era of 3rd Generation Founding Family Chairpersons... Interest in the Positions of Lee Boo-jin and Lee Seo-hyun

So, what roles are Lee Boo-jin and Lee Seo-hyun, the two younger sisters and third-generation executives like Chairman Lee, currently playing at Samsung? Lee Boo-jin, president and CEO of Hotel Shilla, is the eldest daughter of the Samsung family and two years younger than Chairman Lee. She joined Samsung as an employee in 1995, four years after her brother Lee entered the company. She began her full-fledged hotel career in August 2001 when she moved to the planning department of Hotel Shilla. Nine years later, she was promoted to president and has been managing Hotel Shilla since then.

President Lee is regarded as one of Korea's leading female leaders. Last year, the American business magazine Forbes selected her as the only Korean on its list of the world's 100 most influential women. Forbes referred to her as 'Little Kun-hee' and praised her and her family for "dividing the giant corporation of the late Lee Kun-hee, former chairman of Samsung Group."

True to her nickname, President Lee inherited her father, the late Chairman Lee's business acumen and is recognized as a highly capable executive. The business hotel 'Shilla Stay,' which she devoted nine years to, is on the verge of achieving one million room nights in a single year, a first for a single hotel brand. To strengthen expertise in this business, she spun off the Shilla Stay dedicated business unit into a subsidiary in 2014.

Besides hotels, duty-free shops are also one of President Lee's key businesses. Shilla Duty Free, affiliated with Hotel Shilla, has expanded its business by opening stores mainly at domestic international airports such as Seoul, Jeju, Incheon, and Gimpo, as well as at Singapore Changi International Airport and Hong Kong Chek Lap Kok International Airport. Shilla Duty Free, which has secured global competitiveness, has ranked 3rd in the world in duty-free sales according to the 'Moody Report' from 2018 through last year.

◆ Lee Seo-hyun, Chairperson of Samsung Welfare Foundation with Strength in the Arts, Returning to Samsung C&T?

Lee Seo-hyun, chairperson of the Samsung Welfare Foundation and younger sister of Lee Boo-jin, is regarded as having inherited the artistic sensibility of their mother, Hong Ra-hee, former director of the Samsung Museum of Art.

Lee Jae-yong - Hong Ra-hee - Lee Seo-hyun
Photo by Kim Hyun-min

Graduating from Parsons School of Design, one of the world's top three prestigious design schools, Chairperson Lee joined Cheil Industries in 2002 and was promoted to president in charge of management planning after 11 years.

During her tenure as president of Cheil Industries, one of the main businesses was the SPA (Specialty retailer of Private label Apparel) brand Eight Seconds. Eight Seconds was planned in 2012 as a competitor to global SPA brands such as Uniqlo and Zara, with the goal of achieving "10 trillion KRW in sales and becoming a top 3 brand in Asia" by 2020. Chairperson Lee was involved from the brand planning stage of Eight Seconds and is known to have directly participated in store concepts and product design.

Targeting the Chinese market, Eight Seconds combined the number 8, favored by Chinese consumers, with the color red to create its brand logo. The brand recorded annual sales of 60 billion KRW in its launch year and doubled sales the following year, showing strong growth.

However, despite rising sales, operating profits were not high. In May 2015, during the MERS outbreak, the brand posted its first deficit in five years. The following year, 2016, the division recorded an operating loss of 45.2 billion KRW, increasing the deficit. Chairperson Lee took responsibility for the failed business expansion of Eight Seconds and stepped down as president in December 2018. Since then, she has served as chairperson of the Samsung Welfare Foundation.

However, with Samsung C&T's fashion division steadily improving performance after COVID-19, speculation about Chairperson Lee's return is growing. Samsung C&T recorded an operating profit of 100.3 billion KRW in 2021, a significant earnings surprise compared to the deficit in 2020. Samsung C&T's growth has been even more pronounced this year. In the first half of this year, Samsung C&T's operating profit reached 104.1 billion KRW, surpassing last year's operating profit in just half a year.

According to Samsung C&T, Eight Seconds' sales increased by 30% compared to the previous year. Accordingly, the number of Eight Seconds offline stores, which was only 56 in 2020, increased by 12 to 68 as of the end of October this year. One of the new stores planned, the Gangnam-daero store, was established when the brand launched in 2012 but was closed in 2020 due to the impact of COVID-19.

As Eight Seconds, Chairperson Lee's key business, enters a growth phase, there is speculation that her return is part of the 'New Samsung' vision. In August, Chairperson Lee was appointed as an advisor to the CSR (Corporate Social Responsibility) research office at Samsung Global Research, Samsung Group's think tank (formerly Samsung Economic Research Institute).