Samsung chairman in hot water with quip

10:22, April 11, 2011      

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Samsung Electronics chairman Lee Kun-hee is famous for his unwillingness to be exposed to media. He talks publicly once in a blue moon and his appearances at media just amount to one or two remarks made during his passing through the airport checkpoint.

The reclusive Lee got into hot water with his quip. On his way to a meeting with the heads of local conglomerates in Seoul back on March 10, Lee determinedly spoke out about the profit sharing system, a topic of big companies helping smaller ones being under discussion at the South Korean government.

"I have studied economics from early on as I grew up in an entrepreneurial family, but have never heard of it before, nor do I understand what it means. I don't know if the concept is used in a socialist country, a capitalist or a communist economy," Lee said.

His remarks generated harsh criticism from both ruling and opposition parties as Lee hastily talked about the idea which even he did not understand. He appeared to question the ideology of the government, pushing the idea of shared growth, which South Korean President Lee Myung-bak placed as priority among state affairs, to wasteful ideological disputes.

Shared growth is an offshoot of President Lee's fair society philosophy, which focuses on easing social polarization in the country, including profit sharing between larger and smaller businesses.

Chung Un-chan, the former prime minister and now the head of the Presidential Commission for Shared Growth of Large and Small Companies, responded to Lee's remarks one day later.

"It's not fair to underestimate the profit sharing because he didn't see the idea in the books that he studied. Believing the profit sharing is designed to steal profits from big companies and connecting it to ideological issues is misunderstanding of the idea," Chung said.

In February, Chung proposed the system in which large conglomerates should voluntarily share excess profits with their subcontractors and other smaller firms.

Finance Minister Yoon Jeung-hyun voiced support for the system, saying that the definition of excess profit and means to share it should be further discussed, but the government should stand by its purpose of shared growth.

Another remark made by Lee on March 10 stirred fury from the government. Lee noted that the government's economic policy was not fully satisfying, but it did not deserve an 'F' on its report card.

Regarding Lee's undervaluation of the economic policy, Minister Yoon said in a report to the National Assembly on March 14 that it is really sad one of the heads of local conglomerates underestimated the government's economic policy even though they had been given various policy supports.

Yoon also noted that great scholars at home and abroad, foreign media and international organizations acknowledged the country's swift and drastic policies help the South Korean economy escape from the global financial crisis. Local media reported citing anonymous officials in the presidential office that the government was displeased with what Chairman Lee had said.

Samsung Electronics has been regarded as one of the best beneficiaries from the government's efforts to keep the local currency from being appreciated against the U.S. dollar at a faster pace. Samsung's operating profit is estimated to be tens of billions of won higher or lower when the local currency moves by 1 won versus the greenback.

Boosted by the government's policy efforts, Samsung Electronics posted 10.93 trillion won (10.1 billion dollars) of operating income in 2009 when the global financial crisis was on the peak. Last year's operating profit surged almost 60 percent on-year to 17.3 trillion won.

The world's largest technology company by sales, however, said on April 7 that its preliminary estimate of operating profit for the first three months of this year would come in at 2.9 trillion won, down 34.2 percent from 4.41 trillion a year earlier.

Market watchers expected Samsung's profit for 2011 to fall short of those in the past amid the trend of appreciating local currency.

Following the reports that the government and political circles were uncomfortable with his comments, Chairman Lee retracted his remarks on March 16, saying that he did not intend to undervalue the economic policy.

Chairman Lee apologized once again for what he called a misunderstanding on March 31, saying his real intention was to point out that the South Korean economy recovered from the crisis faster than any other nation in the world.

Back in April 1995, Mr. Lee suffered similar hardships from his critical remarks on the government. "South Korea's politics is the fourth-class, administration is the third class and business is the second-class," Lee said at that time.

Source: Xinhua
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