[THE INVESTOR] Many start-ups want to be like Samsung. Ironically enough, Samsung wants to be like a start-up. And for the past few years, the nation’s largest conglomerate has been working hard to go back to basics.
Some liken it to a patient lying on an operating table: Some of its affiliates are being removed like dead tissue, while others are being stitched back together, at times after receiving several blood transfusions.
The head surgeon is Samsung Group vice chairman and heir Lee Jae-yong.
Since Samsung Group chairman Lee Kun-hee was hospitalized after a heart attack in 2014, his son Jae-yong has been working to streamline the 78-year-old business to make it more agile and efficient.
As part of the initiative, Samsung went on a selling spree, offloading its affiliates and landmark assets.
The conglomerate sold off six of its chemical business affiliates, including Samsung Total Petrochemical and Samsung General Chemicals, over the course of two years from 2014.
After selling the head office of Samsung Life Insurance in Taepyeong-ro, central Seoul in January 2016, it also plans to dispose the head office of Samsung Fire & Marine Insurance in Euljiro, central Seoul.
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It tried to sell marketing business arm Cheil Worldwide, but the negotiation with the prospective buyer, French marketing company Publicis of France, ground to a halt.
The conglomerate plans to split the logistics solutions business from system integration firm Samsung SDS, and some market watchers suspected that the split-off is aimed at merging the logistics part with trading and construction firm Samsung C&T-- Samsung SDS officially denied the rumor of the merger recently.
While pushing hard to increase business efficiency by eliminating and merging affiliates, which were less profitable or unrelated to Samsung’s core businesses for future growth, Lee has been attempting to put more weight on new businesses that he thinks will become new revenue sources of the conglomerate.
Among the new businesses are biopharmaceuticals, the Internet of Things, and financial technology.
“It is no secret that the junior Lee pays a keen attention to the biopharmaceuticals businesses, Samsung Bioepis and Samsung BioLogics,” a Samsung insider said.
“Just before Samsung BioLogics was launched in 2011, the vice chairman called the CEO of Samsung BioLogics into his office to give him a pep talk and requested him to make the utmost efforts to grow what would become a new growth engine of the conglomerate,” the source added.
Led by the vice chairman, the conglomerate has also tried to shift its focus from hardware-oriented businesses to software-based ones, aiming to catch up with global software giants, such as Google.