Samsung's open, hidden strategy under unproven head

People are silhouetted as they pose with mobile devices in front of a screen projected with a Samsung logo, in this file picture illustration taken in Zenica October 29, 2014. [Photo/Agencies]

Samsung Asset Management, one of Samsung Group's finance units, was acquired in May 2014 by Samsung Life Insurance, a core part of the group's complex ownership structure. The country's largest life insurer with some 200 billion dollars in assets is the largest shareholder of Samsung Electronics. Lee Jae-yong has a 25. 1 percent stake in Cheil Industries, the group's de-facto holding company, which in turn owns a 19.4 percent stake in the life insurer.

"The merger between Samsung Life and Samsung Asset will create synergy. Samsung Asset has allegedly spurred the development of ETF and index fund products," said the executive.

According to local media reports, the junior Lee recently instructed executives of the group's finance units to seek M&As and business opportunities with global players to make inroads into the global financial market.

Prospects are divided over whether the junior Lee's "BlackRock project" will succeed.

"A finance company's success depends on man. After Lehman Brothers and Bear Sterns collapsed and their assets were sold to separate players, most of best minds quitted the companies. Even if Samsung acquires foreign players, it might gain an empty shell alone. It is doubtful whether the manufacturing-driven Samsung with a rigid corporate culture could understand the culture of the

finance industry," said the former executive.

"There are lots of young South Korean talents who studied finance abroad. If Samsung hires them adequately and develops global networking via them, it would become one of the world- famous asset managers," said the latter executive.

Unproven

The divided forecasts for Lee Jae-yong's push for finance reflects the remaining worries about his management ability. According to a survey released on March 30 by the private Economic Reform Research Institute, he ranked seventh in terms of management ability among 11 heirs apparent of the country's conglomerates who have more than five years of management experience.

More than one-third, or 36.7 percent, of respondents cited the dearth of management ability as the biggest issue in the transfer of management control from parents to children. Some 30 percent denounced illegal inheritance of wealth.