Samsung’s ‘Mach Management’ signals speed

It is unclear whether the Samsung chief’s new catchphrase “Mach Management” will replace the group’s time-proven motto for success, “New Management.” But Mach Management draws attention to at least one important aspect of change: speed.

Many changes were observed at the country’s largest business group as it ushered in another 20-year cycle of the much-touted 1993 New Management initiative, including the mergers and changes of hands between affiliates in recent months.

And the return of Samsung leader Lee Kun-hee from a three-month overseas stay appears to be accelerating the initiative.

Last Tuesday, the 72-year-old Samsung Electronics chairman went to his office at the Seocho headquarters of the group’s flagship company for the first time since October. He had stayed overseas since Jan. 11 - partly for rest and partly for drafting business plans - before returning to Korea on April 17.

That same day, Samsung Electro-Mechanics, Samsung Fine Chemicals, Cheil Industries and Samsung SDS sold a total of 3.28 million shares of Samsung Life Insurance in a bloc deal to Korean and foreign investors. That leaves Samsung Everland as the only nonfinancial affiliate of the group with a stake in Samsung Life Insurance.

Samsung Life Insurance also bought 298,377 shares of Samsung Fire and Marine Insurance from Samsung Card on Tuesday. With that, the life insurer’s stake in the non-life insurance affiliate rose to 10.98 percent from 10.36 percent.

The sales eased a cross-shareholding structure that centered on Samsung Life Insurance under which Samsung Life owns shares of Samsung Electronics, which owns shares of Samsung’s manufacturing affiliates, which own shares of Samsung Life.

The moves, which enhance both the life insurer’s independence from other affiliates and control over affiliates, was seen by some as heralding a significant change, such as creating a finance-holding-company system. At the pinnacle of the system, they think, will be Samsung Life.

Reinforcing the speculation was the purchase by Samsung Life of 5.81 percent of Samsung Card in December. The shares, worth 264.1 billion won ($253.7 million), were sold by Samsung Electro-Mechanics, Samsung Heavy Industries and Samsung C&T. That increased the insurer’s stake in the card issuer to 34.41 percent, closing in on 37.45 percent held by the biggest shareholder of the card company, Samsung Electronics.

Samsung has yet to adopt a holding company structure, although Samsung Everland, at the top of a complex web of share cross-holdings, is considered a de facto holding company.

Lee Tae-kyung at Hyundai Securities said Samsung is seen as moving toward a two-holding-company system, one finance and one nonfinance.

Mergers of several group affiliates in recent months - including Samsung SDI and Cheil Industries, and Samsung General Chemicals and Samsung Petrochemical last month - were to boost efficiency of the group’s nonfinance businesses. However, Lee Cheol-ho at Korea Investment and Securities also saw them as part of efforts to break off the complex cross-shareholding at Samsung.

Samsung dismissed speculation about the holding-company system, saying only that it wants to simplify its much criticized structure.

The Chosun Ilbo quoted an unnamed senior Samsung official as saying the group plans to spend 1 trillion won to streamline the structure by 2016.

“It is too early to link recent changes with a change in Samsung’s governance structure or a move to transform into a finance-holding model,” said Kim Tae-hyun, an analyst at NH Investment and Securities.

Kim said there may be more mergers, which would make it easier for the group to focus on future business investment like the five growth-engine projects it charted in 2010. The projects, with an ambitious 10-year incubation plan worth 23.3 trillion won, include medical equipment, biomedicine, solar cells, vehicle batteries and light-emitting diodes.

BY MOON GWANG-LIP[joe@joongang.co.kr]