Lee Kun-hee will retire from Samsung on July 1

After Chung Mong-Koo, its Lee Kun-hee’s turn. However, his condition is not as bad as Chung Mong-Koo, the former of chairman of Hyundai Group who is now serving three year suspended sentence. 66 year old Lee Kun-hee, former chairman of Samsung Group, will retire on July 1, 2008 after serving in Samsung for 42 years. Following allegations of tax evasion and breach of trust Lee-Kun-hee resigned on April 22. There were also bribery charges against him but they were dropped. Wall Street Journal reports:

Mr. Lee will officially sever employment ties with Samsung Group July 1 by leaving Samsung Electronics Co., its flagship company, a group spokesman said. "Former Chairman Lee leaves Samsung to keep his promise to do so. He will only remain as a shareholder of Samsung companies," the spokesman said.

Mr. Lee, 66 years old and one of the country's most powerful figures, remains officially employed by Samsung Electronics although he stepped down as its chairman and chief executive in late April.

Analysts said they expect Mr. Lee to remain an influential figure in the group, South Korea's largest conglomerate by assets, even though he is no longer involved in its operations.

Mr. Lee will officially depart from Samsung but he will remain as the biggest individual shareholder of Samsung companies. Mr. Lee holds 1.9% of Samsung Electronics, 3.7% stake in Samsung Everland, and 4.5% of Samsung Life Insurance Co. Mr. Lee also controls another 16.2% stake in the life insurer. After retirement Mr. Lee will remain as an important person in the group but he will not be able to exercise his powers over company operations.

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Samsung Total Petrochemicals Co., Ltd. is planning to open its office in China

On June 1^st,Samsung Total Petrochemicals Co., Ltd. , a South Korean petrochemical producer, announced to open its office in China. The company is planning to produce and sale petrochemical products in China. The new office will oversee the production and sales of polypropylene (PP), a petrochemical product mostly used in cars and electric appliances. The Economic Times reports:

Foreign firms have been eager to invest in China's huge petrochemical industry, which has been expanding at a double-digit annual rate in recent years. Last week, South Korea's largest refiner SK Energy confirmed it had agreed to buy a 35 per cent stake in a joint venture with Sinopec Corp to build a petrochemical complex in central China.

Samsung Total Petrochemicals Co., Ltd. is a joint venture formed by the famous South Korean conglomerate Samsung Group and Total S.A. (NYSE:TOT),a reputed French oil producing company. In January, Samsung Total announced to build a composite polypropylene plant in China with an annual production capacity of 28,000 tonnes. Construction of the plant will start from this month. Though the company did not reveal the value of the deal, from a reliable source, it has been confirmed that the investment would be around 1 trillion won.

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Samsung's reorganization and reassignment creates further controversies

First, it was the top level executives; now, Samsung Group is reorganizing its companies in an effort to reinvigorate its image. According to the latest news, Samsung Electronics Co.(SEO: 005930), the major profit earner of Samsung group, will be combined with its home appliance division that makes refrigerators, air-conditioners and washing machines. The home theatre, DVD and Blue-ray player business will be merged with its TV section. Samsung’s notebook computer, digital music player and set top box business will be transferred to its telecommunications network division. Wall Street Journal reports:

The moves are "in line with the latest technology trend" and "we hope to further strengthen our position as a digital convergence leader," the company said.

The moves follow a change at Samsung Group's top management last week, when Samsung Electronics said external relations chief Lee Yoon-Woo would be its new chief executive, succeeding Yun Jong-Yong, who had led the electronics giant since 1997.

But analysts said it is still uncertain if the reorganization would bring about any significant synergies.

"We haven't paid attention to its home appliance business, which hasn't contributed to its profitability much," said Song Myung-Sup, an analyst at CJ Investment & Securities. "It remains to be seen if the combination will actually create synergies."

Unfortunately, what seems to be an effort to revive has created further agitation and controversies. Thirty nine year old, Lee Jae-Yong, Samsung Electronics’ former chief client officer and son of the former chairman of Samsung Group, Lee Kun-Hee has been reassigned to a new post. On Thursday, in a statement, Samsung Electronics said that Lee Jae-Yong, will work in China, India, Russia, and in other commonwealth of Independent states to develop the company’s business. Though he was not charged of any wrong doing, after Lee Kun-Hee was charged with tax evasion and breach of trust, Lee Jae-Yong resigned along with his father. Yong’s reappointment has irked the Samsung employees. They protested against his reassignment.

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Samsung makes the biggest reshuffle of the year: Will it revive the company's image?

In an attempt to regain its image, South Korea’s largest business conglomerate Samsung Group made a series of replacements at executive level triggered after Lee Kun-hee, chairman of the group, resigned from his position on April 22. On Wednesday, the company declared that it replaced its chief executive. Yun Jong-yong, chief executive since 1996, will be replaced by Lee Yoon Woo, head of Samsung Electronics external relations. Yun Jong-yong will be working as a standing adviser. Samsung Electronics’ former chairman resigned after charges of tax evasion and breach of trust were brought against him. There were also serious bribery allegations but they were dropped. International Herald Tribune reports:

Lee Hak Soo, another vice chairman of Samsung Group, also quit the board in April.

Samsung Electronics is the world's biggest maker of memory chips and liquid-crystal displays. It is also the largest cellphone maker in Asia.

While Yun's resignation showed that Samsung wanted to appear serious about reform, analysts said, the changes should not mean a major difference in the way the company is run.

"Samsung is showing that it is changing and improving," said Park Hyun, an analyst at Prudential Investment & Securities. "It shows that the company wants to make a fresh start with new people."

Hwang Chang-gyu, another top executive in the semiconductor division, has been replaced. After the announcement of these replacements, the company saw a slight increase in its share price.

The newly appointed chief executive Lee Yoon-woo used to head Samsung’s Electronics’ semiconductor business form 1994 to 2004.

Samsung Group is the largest family-owned conglomerate in South Korea. For years, the organization has been accused of having opaque management. The group may have gone through a major reshuffle but many analysts believe that it will not bring any major change in the way things are done.

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Samsung : Disagreement with subcontractors resulted into Gumi plant shutdown

World’s largest electronics company, Samsung Electronic Co., Ltd (SEO:005935), had been forced to shut down its plant due to disagreement over material price with its contractors. This incident also provoked lots of negative criticism and marred the company’s image. The company admitted that its mobile phone handset producing plant at Gumi in Seoul had to stop 20% of its operations for eleven hours, starting from 11 p.m. Friday to 10 a.m. Saturday, as the small and medium-sized subcontractors accused the company of passing on the cost-cut burden upon them. Korea Times reports:

Samsung said the plant has been normalized after it agreed with the participants to review prices in upcoming talks. However, worries are high that Samsung’s premium handset image might get hurt in the long term without decisive measures to ease such disputes.

Samsung hopes to narrow the market gap with the industry leader Nokia by sticking with a two-tier strategy _ premium phones such as the Soul and Haptic from its domestic plant and mid-tier phones from those overseas. The company plans to increase the annual production of handsets in Gumi to 80 million this year from 75 million in 2007.

This is the first incident of production halt in Gumi plant since its inception in 1988. There are 630 suppliers in Gumi. According to the report of Strategy Analytics, a market research firm, Samsung and Motorola is currently at the second position controlling 16.4% of the global mobile phone market. A Samsung spokesperson said that the company should strengthen its price competitiveness at Gumi plant as the product is losing its pricing edge. Currently, Samsung has manufacturing facilities in India, China, and Brazil. It will set up another facility in Vietnam to meet its current production target of 200 million.

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