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LG, Samsung undergo shakeups

Posted: 22 Oct 2010 ?? ?Print Version ?Bookmark and Share

Keywords:consumer electronics? cell phones? LCD? semiconductors?

Family-run LG Electronics Inc. and Samsung Electronics Co. Ltd are undergoing major changes in South Korea. They may also be preparing new efforts in cell phones, LCD TVs and semiconductors.

In September, Nam Yong, CEO of LG Electronics, was ousted because of the poor performance of the company's LCD TV and smart phone units. He was replaced by Koo Bon-joon, then an LG executive, and the brother of LG Group Chairman Koo Bon-moo. Since his appointment, Koo Bon-joon has shaken up the company and promised to hasten product development. He is also said to be pushing the move to buy a majority stake in memory maker Hynix Semiconductor Inc.

Samsung, meanwhile, had Lee Kun-hee raising eyebrows, when he said the company ''needs to get younger,'' as reported in The Korea Herald. This prompted the belief that Lee Kun-hee, chairman of Samsung, is going to give his son, Lee Jae-yong, a larger role in the company. This brings with it the implication that the company may implement an even more aggressive strategy than before.

Hyundai, LG and Samsung are among South Korea's largest chaebols or family-owned conglomerates. Starting in the 1960s and even before that, the chaebols helped fuel the miraculous economic growth in Korea. But for years, the family-run conglomerates have also been the subject of criticism.

Some charge the family-run companies control too much power and have benefited from too many special favors and questionable business deals from the government. Some of these conglomerates were exposed during the Asian Financial Crisis in the late-1990s, when many fell into huge debt or collapsed.

Many, including Hyundai, Samsung and others, have been the subject of ongoing scandals and corruption. In 2008, Lee Kun-hee resigned amid charges of tax evasion, but he has since returned to the company and re-assumed his star status in the country.

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