Samsung business still at risk, facing ‘triple threat’ at home

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Last updated: August 31st, 2020 at 17:31 UTC+02:00

Between a historically low production output, steadily declining electronics sales across the globe, and “humilitating” chipmaking troubles, business hasn’t exactly been good for Samsung this year. While a lot of those issues stem from the unpredictable turn of events 2020 had in store for us, Samsung is in need of solutions, not excuses. Especially given how its top management is getting dangerously close to yet another high-profile scandal not long after Vice Chairman and heir apparent, Lee Jae-yong, managed to get his prison sentence over government bribery miraculously suspended.

Suspended, but not overturned, because South Korean officials are still mulling over whether to go after Lee once again for largely the same thing – the manner in which he consolidated his power at Samsung, tightly grasping control of the conglomerate that’s been in the family for over 80 years now.

Samsung’s trifecta of headaches: coronavirus, courts, Korean government

Lee already vowed to end Samsung’s royal line but the fact that he continues to benefit from it isn’t something Seoul officials are eager to drop. New reports out of South Korea indicate a retrial is still very much in the realm of possibilities. Another major domestic worry for the chaebol is the increased regulatory pressure that’s lately manifested in a piece of legislation outright called the “Samsung Life Insurance Act” in reference to the company’s indemnification subsidiary.

If the sitting parliament manages to enact this regulative, SLI would be forced to divest itself from Samsung Electronics, still the flagship division of the conglomerate. Even after a major selloff the proposal itself prompted, SLI still owns the equivalent of almost $17 billion in Samsung Electronics and is an important cog in the machine allowing Lee to retain tight control of Samsung Group.

Then there’s the continued challenge of doing business in this new stay-at-home economy – or what remains of the old one. One silver lining for Samsung on this front is that the novel coronavirus pandemic prompted an innovation boost at its B2B division. But all things considered, you know business has been bad when a global economic crash over a highly contagious disease just barely makes it into your top three annual risks.

BusinessGeneral Lee Yae-yongSouth Korea
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