Friday, December 15, 2006

Korean Family Management and Family Succession

Westerners looking at Korean global conglomerates see the family management issue at Samsung, Hyundai-Kia Motor Group, or LG getting considerable press--and, quite often the topic of family succession draws lots of negative press and controversy. In Korea, it is a frequent subject of media attention. However, family management in Korea is the norm...with large and small businesses alike. This Korea Times article looks at family succession among Korea consumer and retail sectors. I think it provides some insights into how the conglomerates' top leadership gradually groom their heirs for succession--a process that takes years.

Executives of consumer goods and retailing conglomerates _ Lotte, Shinsegae, Hyundai Department Store and Aekyung _ are handing over their leadership to their eldest sons.

Shin Dong-bin, heir apparent of the Lotte Group, is the first among next-generation executives who has been expanding his management over Koreas largest retailer founded by his father, Chairman Shin Kyuk-ho.

Since Shin Dong-bins appointment to vice chairman in 1997, his father started to flesh out his management succession plan by gradually giving his son more control and reducing his involvement in the conglomerates affairs.

The junior Shin is the biggest shareholder of Lotte Shopping with more than a 21 percent share. Lotte Shopping is the flagship of the group that operates Lotte Department Store and Lotte Mart.

He has also been spearheading Lottes globalization projects that include plans to establish department stores in Russia and China and a discount store in Vietnam.

In the meantime, Chung Ji-sun, vice chairman of Hyundai Department Store Group, has been overseeing its business since 2003 under the guidance of his father, Chairman Chung Mong-keon. The senior Chung is the third son of the late Hyundai Group founder Chung Ju-young.

The group recently announced that the chairman will step down due to illness and have his son fully manage Hyundais operations, making him the apparent successor.

Ji-sun is currently focusing on securing a site in the Pangyo new town, Kyonggi Province, to establish its retail and logistics businesses, sources say.

Chung Yong-jin, who has been recently promoted to vice chairman of Shinsegae, will be following in the footstep of the groups CEO Koo Hak-su and mapping out core strategic plans for Shinsegae Department Store and E-Mart.

He is the son of Shinsegae Chairwoman Lee Myung-hee and Honorary Chairman Chung Je-eun. Myung-hee is the younger sister of Chairman Lee Kun-hee of Koreas largest conglomerate Samsung.

Yong-jin is actively involved in the process of opening up a new shopping mall with the U.S.-based Chelsea Premium Outlets in Yeoju, Kyonggi Province, scheduled for early next year.

At Aekyung Group, Chae Hyung-suk is the rising executive, who has been recently appointed as CEO and has worked with its management team for 17 years. He is the eldest son of Aekyung Chairwoman Chang Young-shin.

Chae is the executive behind launching Jeju Air and dealing with Samsung Corp. to acquire Samsung Plaza.

Sources say he will put priority on expanding Aekyungs department store chain next year.

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