Lee Kun-hee returns to head flagship Samsung Electronics

Lee Kun-hee

The problem solver has returned.

That’s the sentiment at Samsung Electronics, the flagship company of Samsung Group, Korea’s largest conglomerate, as the group’s former chairman Lee Kun-hee yesterday made a widely-anticipated but sooner-than-expected comeback as the company’s chairman.

It was 23 months ago that 68-year-old Lee - the son of the group’s founder Lee Byung-chull (1910-1987) - stepped down from the group’s chairmanship after being indicted on charges that included tax evasion.

According to Rhee In-yong, chief spokesman at Samsung Electronics, group executives met twice last month and concluded that Lee’s experience and knowledge were crucial given the economic crisis. “That was when the Toyota recall debacle was taking place. [Samsung] was doing well, but there was a heightened awareness of crisis,” Rhee told reporters yesterday.

Lee accepted the request for a return Tuesday, and was quoted as saying business is facing a crisis at the moment.

“Top global companies are collapsing and we don’t know what will happen to Samsung,” Lee reportedly said. “There’s no time for hesitation. We must act.” Lee had received a suspended three-year jail term for tax evasion four months after his indictment, but President Lee Myung-bak granted him a special presidential pardon last December, hoping that he could rejoin efforts to help the country’s bid to host the 2018 Winter Olympic Games. Lee is a member of the International Olympic Committee.

In January, Lee made an appearance at the Consumer Electronics Show in Las Vegas - his first such appearance since his indictment. And in February, as Samsung Group commemorated the centennial anniversary of the birth of its founder, Lee told reporters at an official ceremony that he would “help out Samsung Electronics if needed.”

While some analysts said that Lee’s return was sooner than expected, most agreed that Lee will bring to Samsung stability and direction.

“Considering that the companies in general are still reeling from the economic crisis, Lee’s leadership will factor positively for Samsung,” said Kim Jeong-hun, a researcher at Korea Investment and Securities. “Also the company must find new growth engines amid heightened competition with Japan and China. Lee could facilitate that process.”

Last year, Samsung Electronics posted 136 trillion won ($120.1 billion) in sales and announced last week it expects double-digit sales growth this year.

But industry observers say the world’s largest maker of computer memory chips and the No. 2 maker of mobile phones is experiencing growing competition in key business areas like chips, TVs and handsets - and particularly in smartphones. They say the company must cultivate new revenue sources. Samsung says Lee’s major role will be in drafting a long-term vision for the group and the electronics company and will not effect the role of its current CEO, Choi Gee-sung, and chief operating officer, Jay Y. Lee. Jay Y. Lee, the chairman’s only son, was promoted to the position in December.

Industry sources say Lee’s return will solidify his son’s standing in the company. The younger Lee is largely seen as the chairman’s hereditary successor.

By Kim Hyung-eun [hkim@joongang.co.kr]