Saturday, March 12, 2011

Biting Quip by Samsung’s Lee Shocks Korea

By Evan Ramstad

Samsung Electronics Co. Chairman Lee Kun-hee automatically gets lots of media attention as the head of South Korea’s largest business and because he is the country’s richest person.
He usually doesn’t do much with it though. Mr. Lee hasn’t given any media interviews since the 1990s.

Typically, his media appearances amount to a comment or two as he passes from the baggage claim of an airport to his waiting car.

And in the rare moments he does talk publicly, the substance of his comments can best be described as Delphic.

For instance, when Mr. Lee passed through an airport in Seoul earlier this week, he said: “We have no time to think and should quickly put current undertakings back on track. We should make greater efforts to launch high-quality products globally and make them top-selling brands.”

So when Mr. Lee decided on Thursday to speak out about a debate going on in the South Korean government right now about the well-being of small- and mid-sized companies, his comments generated big headlines.

Mr. Lee responded to a question about an idea being discussed by the Presidential Commission for the Shared Growth of Large and Small Companies to develop a method of profit-sharing. No formal proposal has been made and not even the commission has fully defined the idea.

Even so, Mr. Lee said on Thursday: “I studied economics for a long time as I grew up in an entrepreneurial family, but I have never heard of this anywhere else, nor do I understand the concept, either.”

Mr. Lee said he wasn’t trying to express whether he was for or against the idea, but in expressing that thought he appeared to question the ideology of government leaders. “I just don’t know if the system is from a socialist economy, capitalist or communist economy,” he added.

The issue holds particular importance for Samsung, a group of approximately 60 companies that, in addition to being largest in size, also generates the biggest profits and is frequently criticized by left-wing politicians and interest groups. Samsung Electronics Co., the biggest of all Samsung firms, last year earned a record 16.15 trillion won, or about $14.6 billion, far more than any South Korean company ever has.

On Friday, Chung Un-chan, the immediate past prime minister and chairman of the commission that Mr. Lee criticized, responded to Mr. Lee’s remarks.

“It’s not fair to underestimate the meaning (of profit-sharing) just because he didn’t see the concept in the books that he studied,” Mr. Chung said. “Believing that profit-sharing is designed to steal profits from big businesses and connecting it to ideological issues is misunderstanding the true meaning.”

South Korean news media on Friday afternoon carried reports from anonymous officials in the presidential office that were also critical of Mr. Lee. Officially, the Blue House said nothing, however.

Asked whether Mr. Lee’s comments represented an official position of Samsung, a representative of a Samsung’s global communications office, issued this response:

“Chairman Lee has always emphasized the importance of cooperation and mutual growth among large corporations and medium-sized companies. When asked by reporters about the profit sharing system yesterday, Chairman Lee said he was neither in a position to approve nor disapprove because he did not understand the concept of the system. Chairman Lee said that he did not understand the concept of the profit sharing system. It is therefore inappropriate and unreasonable to interpret his comments as political or to consider them as Samsung’s official position.”

And in response to a question about when Mr. Lee last made a political comment, the representative said:

“Chairman Lee has in the past responded to reporter questions regarding the South Korean economy, IT industry, and the future of Samsung.”

Last September, Mr. Lee attended a meeting of business leaders hosted by President Lee Myung-bak where the topic of big companies helping smaller ones was first discussed.

When he left that meeting, the Samsung chief appeared to signal he was on board with the government’s thinking. “I will take this matter more seriously and do what I can do to make a system and infrastructure for co-prosperity of big and small firms,” Mr. Lee said at that time.

For a country that’s accustomed to Mr. Lee not saying much of anything, his statement on Thursday was a shock. Various news accounts described it as “rare” and “controversial” and “shaking political circles.” Some called it “uncomfortable,” “direct” and “arrogant.”

The last time Mr. Lee said something that caused such a stir was in April 1995, when he complained about South Korean politicians to Korean reporters in Beijing.

“Korea can’t become a ‘first-class’ nation unless regulation and ‘a sense of power’ disappear,” Mr. Lee said at the time. “The nation’s politics is the fourth-class, bureaucratic are the third-class, and business is the second-class.”

Those remarks appeared to challenge a Confucian hierarchical tradition that Koreans are taught, in which intellectuals were celebrated as the highest of four classes and businessmen and merchants as the lowest. ◦

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