When Samsung Group chairman Lee Kun-hee was hospitalized after a severe heart attack on May 10 last year, the spotlight shone on his son Lee Jay-yong, vice chairman of Samsung Electronics.

The 47-year-old junior Lee may have been groomed for succession during more than two decades at his father’s business empire. Still, the de facto leader of South Korea’s largest conglomerate was largely untested.

The timing was also bad. The group’s flagship firm, Samsung Electronics, which generates more than half the group’s revenue, was suffering from an unprecedented plunge in profits, while highly-publicized patent battles with Apple continue around the world.

For Lee, there was no time to waste. Over the past year, he kept busy, seeking to prove his competence and ability to reshape the future of Samsung.

The Samsung heir has poured resources into global networking in recent years. His frequent travels and meetings with celebrity CEOs sometimes drew skepticism in the early days, because they didn’t seem to lead to tangible results. But the efforts began to bear fruit last year.


The legal war with Apple was a tricky issue at the time. Lee had to juggle the conflict of interest: Apple was Samsung’s key competitor in the smartphone market and was also a major client for its chips.

At a conference held in Idaho in July, Lee made a proposal to Apple’s CEO Tim Cook, although not much is known about the details. But one month later, the two companies announced they would withdraw from all their legal battles outside the United States. In the following months, Apple decided to use Samsung’s chips for its next iPhone.

Lee relentlessly continued to extend cooperation with global companies.

He ended Samsung’s patent disputes with Microsoft when the company’s CEO Satya Nadella visited Korea in September. He met Roche chairman Franz Humer to strengthen Samsung’s partnership in bio technology. He also showed interest in technological convergence with carmakers during his meeting with Volkswagen Group chairman Martin Winterkorn.

More recently, he had several meetings with China’s political and business leaders, including Chinese President Xi Jinping, as part of renewed commitment to the all-important market.

“Lee has been ramping up efforts to build a global network that would pave the way for Samsung to lead the future business hegemony across industries,” said Park Joo-keun, head of CEO Score, a chaebol tracking website.

Samsung’s business areas also started being streamlined under Lee’s speedy management style.

Samsung Electronics acquired eight foreign start-ups over the past year alone, which compared with 18 acquisitions made between 2007 and 2013.

At the nation’s family-run conglomerates, acquiring another company is usually a time-consuming process. But Lee is changing traditional management practices.

The newly acquired firms reflected Lee’s future vision, as they specialized in health care, medical equipment, mobile printing, displays and the Internet of Things.

In the meantime, he sold off four less profitable defense and petrochemical units to Hanwha Group in November. As a result, Samsung’s key business areas have been reshaped, centering on IT and finance.

Unlike his charismatic father, the son still has kept a low profile and his flexible leadership has also started gaining support among employees at Samsung, which has long been known for its rigid corporate culture.

Every Wednesday, Samsung presidents gather at Seoul headquarters for a weekly meeting. But employees and security guards are no longer required to make a deep bow to greet top executives.

Lee prefers to travel alone on overseas business trips rather than being accompanied by a group of executives ― a typical protocol widely seen at other chaebol groups. Another indicator of his laid-back attitude is the limited use of private jets.

“The vice chairman prefers to receive reports via a mobile messaging app,” said a Samsung executive, declining to be named.

“He also cares about details. He doesn’t hesitate to talk with a working-level employee if he has any questions.”

Signs of a profit recovery at Samsung Electronics are also giving Lee a boost.

After the chairman’s hospitalization, the firm reported that profit had declined to 4.6 trillion won in the third quarter. But the figure recovered to the previous level of 6 trillion won in the first quarter this year, largely driven by strong chip sales.

The company predicts better performance in the coming quarters, pinning high hopes on its new flagship smartphone, the Galaxy S6, which debuted in April to positive reviews around the world.

Despite the dismal failure of its predecessor, the S5, Lee has shown confidence in the company’s mobile division chief Shin Jong-kyun and the marquee smartphone returned stronger, with upgraded styling and features.

“Samsung has handled the crisis properly under the leadership of the junior Lee,” said an analyst on condition of anonymity.

“The future of Samsung will depend on the performance of his pet projects such as battery, IoT and bio tech businesses.”

In a recent survey conducted by a local daily, 7 out of 10 experts gave a top A grade for Lee’s leadership over the past year. But many industry watchers say his management ability can only truly be evaluated after at least five years.

But Lee seems as aware as anyone of the responsibility on his shoulder. He is often quoted as saying: “The largest source of stress for me is that maintaining the company as it is now is not enough.”

By Lee Ji-yoon (jylee@heraldcorp.com)