Samsung Looks Forward

Samsung Chairman skips 20th anniversary event, but the group proud of chairman's huge achievements

Chairman Lee Kun-hee of Samsung Group spent the 20th anniversary of his leadership on Dec. 1 away from any celebratory events due mainly to the allegations by former legal team manager Kim Yong-chol accusing the largest conglomerate in the country of various wrongdoings such as slush funds, illegal lobbying and the illegal transfer of Samsung affiliate shares to the chairman's only son, Jae-yong, to prepare for the imminent handover of the stewardship of the group from father to son.
A special investigation unit of prosecutors will conduct an intensive probe on the group's alleged offenses as recommended by the parliament. The business group is said to be facing perhaps the greatest crisis since its foundation more than six decades ago.
But, critics note, despite an alleged string of wrongdoings, the chairman deserves to be judged for his achievements at the helm of the business group in the past two decades since taking over from his late father, Lee Byung-chul, the founder of the group, officially in Dec. 1987.
They said, first and foremost, Chairman Lee should get credit for the globalization of the group's operation. When he assumed the helm, Samsung Group was the largest conglomerate in the country, but its overseas presence was minimal at best.
"Change every thing except your wives and children,"cried out the chairman when he began running the group.
The group introduced a new management strategy geared toward reform and dubbed 'Quality management,'which was instrumental in overcoming the financial crisis of 1978. It succeeded in globalizing its operation under its strategy called 'selection and concentration'to expedite the structural reform of all of the group's affiliates.
He declared the second birth of the group through 'autonomous management, 'great attention to technology'and 'respect for human resources'with an ultimate objective of achieving one trillion won in net profit. At the time, no one thought that the promise would be realized, it was just an impossible delusion. But the chairman's pledge came true after 2 decades of his stewardship.
The conglomerate now boasts 11 its own products leading the world including semiconductor chips, TFT-LCDs, cell phones, and monitors. The group's brand value was boosted to 21st in the world at $16.9 billion, going shoulder-to-shoulder with some of the top global firms.
The group's total sales amounted to 17 trillion won in 1987, but it has now expanded 8.9 times to 152 trillion won. Its pre-tax profit amounted to 14.2 trillion won now, up 52.6 times from 270 billion won two decades ago.
In the meantime, the "Tech Forum"conducted by Samsung Electronics showed that the company's results for this year will show a great improvement over last year in all sectors of its operations except semiconductor chips. Cell phone sales will reach 160 million sets, up from 133 million projected early in the year, up 20 percent. The operating profit from the information-communication sector will reach 2.5 trillion won.
The operating profit from the cell phone sector alone reached 2.8 trillion won one year, but dipped to the 2 trillion won level last year due to cheap handsets marketed by Nokia.
Profit from the LCD sector is likely to reach the highest in the company's history with the early operation of the 8th generation lines from August. Third quarter operating profit stood at 670 billion won.
Vice Pres. Choo Woo-shik, head of the investor relations team for the Samsung affiliate, said the upbeat projection is based on the fact that the sale of larger-than-46-inch TV panels would dramatically increase during the 4th quarter. The sale of LCD TV sets is likely to surpass the more than 12 million sets projected early in the year. The digital media sector, which has been sluggish, would likely to recover this year and operating profit is projected to reach over 1 trillion won.
The IR team head said the projection for next year is even better than this year with the prices of chips rebounding due to reductions in facility investments and production of some chips.
He said cell phones, LCD-TVs and LCD panels would lead the growth for the company next year. He said the sale of handsets would rise to 200 million units next year from 160 million units this year. He expects the sale of LCD TV panels to rise over 30 percent next year, especially the larger-than-46-inch LCD TV panels, the production of which the company is geared up to expand.
The company's long-term goal is to achieve total sales of $150 billion in 2012 and net profit of $20 billion. The company will focus on the production of system LSI in the non-memory sector of chips and printers to reach that goal. nw

Chairman Lee Kun-hee of Samsung Group.