Source: financial Qiguan
By Jia Qi
It is often said that a Korean’s life is inseparable from three things: death, taxes and Samsung.
Today (October 25, 2020), with the death of Li Jianxi, chairman of SamSung group, who has been repeatedly involved in tax turmoil, these three things are all together at the same time.
Not long ago, Forbes released the list of South Korea’s richest people in 2020, Li Jianxi still topped the list with $17.3 billion. The nominally richest man in South Korea, his journey actually stopped six years ago.
At 11:00 p.m. on May 10, 2014, 72 year old Li Jianxi suffered from a sudden myocardial infarction and was sent to the hospital for emergency treatment. Since then, he has been in a coma for six years.
Now, miracles don’t happen.
After Li Jianxi’s death, Samsung issued a statement: “Chairman Li is a real visionary. He has transformed Samsung from a local enterprise into a world leading innovator and industrial power. His legacy will be eternal.”
Heritage is eternal. And to whom will this eternal legacy be handed over?
This is a matter for the Li family, but also for Korea.
01 “master of change” Li Jianxi
Today, Li’s Samsung Group has gone through three generations.
It was founded in 1938. At that time, China was still in the process of Japanese aggression, and most of its territory had been occupied. Chairman Mao made a speech on “protracted war” at the Yan’an research conference, and established the theoretical program of the national anti Japanese war.
He was founded in the Korean Peninsula in the age of 28.
Subsequently, Samsung successively set up the first sugar mill and the first wool textile mill in South Korea.
After the 1960s, Samsung began to march into the fields of insurance, health care and electronics, and gradually grew into a chaebol empire that can not be ignored in South Korea.
In 1987, Li Jianxi experienced a series of struggles and emerged from his three sons, succeeding his father and becoming president of SamSung group.
Samsung chairman Li Jianxi
As a typical “king of change”, Li Jianxi called out the slogan of “Second Entrepreneurship” as soon as he took office.
But the handover of power is not always peaceful.
It took Li Jianxi six years to become the actual controller of Samsung in 1993.
In terms of specific actions, he has taken the following N measures, many of which are worthy of careful study by managers in the change center:
Through the support of the president of the subordinate company to isolate the secretary room — unite the majority, struggle a few;
Su Binghai, the former secretary room chief, was transferred to carry out a large-scale personnel adjustment of the secretary room;
The power of the Secretary’s office will be gradually closed down;
To divide property with other brothers and sisters in an orderly manner – clearing the border and maintaining internal stability;
Weaken the concept that Samsung is the first in South Korea, repeatedly emphasize the global competition pattern, and emphasize the crisis faced by Samsung Group in various conferences – setting up new common goals;
First of all, he changed his calm personality of few words in the past. He was furious at the Los Angeles conference, and drove the executives who shirked their responsibilities directly out of the meeting hall to show their determination;
Actively contact with the public, actively expose in front of the media – deeply bind individuals and enterprises;
From the corporate culture, logo, company anthem and other superstructure to create a new feeling – new culture construction;
Many inspiring speeches in the interior;
Change the time from 8 to 5 in the morning to 7 in the morning and 4 in the morning. At the same time, employees are required to insist on eating with their left hand for a period of time;
Finally, all this was condensed into a sentence at the Frankfurt exhibition, which was repeatedly quoted by the outside media: “except for the wife and children, everything else is changed.”
Under such a new business strategy, Samsung, which is already the first in South Korea, suddenly wakes up from the hotbed of narcissism and radiates new vitality again.
In the following 20 years, Samsung, led by Li Jianxi, finally walked out of South Korea and became a competitive first-class multinational enterprise group in the international market.
02 the fall of Princess Chang
On the issue of heirs, Li Jianxi did not want to repeat his father’s mistakes.
At first, Li Bingzhe’s idea was that his three sons should share the family property equally.
But Li Changxi, the second son, spent all day playing with caged birds and running dogs fighting chickens, while his younger son, Li Jianxi, did not pay much attention to it. So it was not long before Li Bingzhe decided to entrust his property to his eldest son, Li Mengxi.
However, the early confirmation of “Da Tong” made Li Mengxi gradually sink and his ability declined. In its own responsibility of all the company’s projects, less than half a year there has been a serious decline in performance, loss.
According to South Korea’s compatriot news, Lee wrote in a memoir that Lee’s rise to power was less than half a year before Samsung fell into chaos.
Subsequently, Samsung’s shareholders joined hands in a letter asking Li Bingzhe to reconsider his successor. Under pressure, Li Bingzhe finally took back all the management rights of his eldest son.
After tasting the taste of power, Li Mengxi was not willing to give up. Instead, he went home and secretly collected his father’s black history of tax evasion. He directly reported his father’s real name to qingwatai, hoping to send his father to prison.
This move made Li Bingzhe furious and immediately drove Li Mengxi out of the house.
In order to win the favor of his father, Li Changxi, the second son, offered to take the crime and go to jail for half a year. After he was released from prison, his third brother, Li Jianxi, had become the successor of the three-star empire.
After his successful accession to the throne, Li Jianxi learned a lesson. On the issue of successor, he never stated that his children would inherit the Samsung industry alone. Instead, he left hope for one son and three women.
Among the four, Li Jianxi’s favorite is his youngest daughter, Li Yinxin. When she was 20 years old, she got nearly $200 million in shares, and the prospect is bright.
But an accident changed the pattern. In November 2005, Li Yinxin committed suicide in her apartment in Manhattan, New York. She was only 26 years old.
For a long time, Li Jianxi claimed that he died in a car accident. The cause of his death has not been determined yet. Against the background of the power struggle within the Korean consortium, everything is so complicated.
Li Yinxin is dead, and the war among the heirs will continue.
From left to right are Li Xuxian, his second daughter, Li Fuzhen, and his eldest son, Li zaireng
Although we treat all men equally, in South Korea, where the idea of son preference is very serious, the companies in charge of Lee Jae Rong, the eldest son, are also the most valuable, namely Samsung Electronics and Samsung finance.
On the other hand, Li Fuzhen, the eldest daughter, is in charge of Samsung Hotel and chemical industry, while Li Xuxian, the third daughter, only manages the clothing and advertising business.
As a three star princess, Li Fuzhen has been infinitely close to the throne of power.
Since graduating from yenshi University, a famous Korean University, Li Fuzhen has been practicing in the shopping mall with his father. His eloquent and aggressive personality was once called “Xiao Li Jianxi” by Korean people.
In 2010, Li Fuzhen was promoted to the head of hotel Shilla and Samsung Everland, thus becoming the first female president of Samsung subsidiary.
Even though it is a marginal industry in the three-star Empire, it has gradually developed with the efforts of Li Fuzhen.
In five years, the sales of Silla Hotel increased from 430.3 billion won (about 2.57 billion yuan) to 3.25 trillion won (about 19.4 billion yuan) in 2015, with an increase of more than 650%.
This achievement also makes her voice increasingly high.
But her failed marriage still made Li Jianxi unable to choose her.
In 2014, Li Fuzhen applied to the court for divorce, revealing the cruel reality under the fairy tale for the world.
Many years ago, when Li Jianxi was planning to introduce his beloved daughter to the right couple, Li Fuzhen said he had a boyfriend.
He is a civilian, his own security staff, Ren Youzai.
Unable to accept the reality, Li Jianxi sat from dark to dawn in a cafe.
The eldest princess, overwhelmed by love, is determined to defend her freedom of marriage. In the whole family, no one supports her except her eldest son, Li zaireng.
But now looking back at the elder brother’s support, it has a different flavor.
Under the insistence, Ren Youzai carried the beauty home as he wished. Such a combination was very rare in that class.
After marriage, the Li family arranged for Ren Youzai to go to MIT for a master’s degree. However, the pain of reading was more painful than death.
Recalling that time, Ren Youzai said: “that time was too painful. I killed myself by taking sleeping pills twice, but both were rescued by Fu Zhen. I held her and cried like a child.”
However, in some people’s eyes, no ability, love is OK. Unfortunately, it still didn’t work out.
In 2014, Li Fu Zhen applied to the court for a divorce on the grounds that Ren Youzai was drunk after marriage and committed domestic violence to her more than once.
The news that shocked the whole of Korea quickly ignited the public opinion in South Korea. Li Fu Zhen, who thought he had married love, actually married the iron fist of love.
Li Fuzhen’s ex husband Ren Youzai
The hot discussion in the streets and alleys made Li Fuzhen lose his prestige in the group. Li Jianxi was also deeply disappointed: how can the marriage affair end in such a farce, and how can it be trusted to control such a huge three-star Empire?
On the other hand, Li Xuxian, the third daughter, has not shown anything extraordinary. Under such a background, the only choice is Li zaireng.
03 last heir?
After identifying Li Zairong, Li Jianxi, the second generation of mu, made a comprehensive layout.
Since the end of 2013, Samsung Group has carried out several “amazing big deals” to vertically integrate its main businesses. Just like Li Jianxi’s orderly division of property with other brothers and sisters 20 years ago, the succession of Li zaireng has become clear and clear.
In December 2013, Li Xuxian, the second daughter, was transferred from the position of vice president of the first wool weaving company by his father Li Jianxi to be the president of the clothing department of Aibao paradise.
In April 2014, Samsung SDI, a subsidiary of SamSung group in the field of electronics, merged with first wool, known as “Samsung SDII”. Its business scope includes electronic materials and automotive materials.
After the integration, the electronic business chain under the control of Li Zai Rong has become more complete, and in fact formed an industrial chain of “electronic materials (first wool fabric) – spare parts (SDI) – Samsung Electronics”.
After the merger, Li became the largest shareholder with a 30.4% stake in the new Samsung products. With the help of cross holding, he has actually mastered the SamSung group. After that, Li Jianxi was sent to the hospital and kept in a coma. Li Zairong has become the actual third generation leader of Samsung.
However, in order to succeed, Li zaireng’s political and business operations brought trouble to himself.
Before that, Samsung had calculated that if the inheritance tax was paid in accordance with the law, the value of Samsung Electronics and other enterprises controlled by Lee Jae Rong would exceed 11 trillion won, while the inheritance tax in South Korea would be as high as 60%.
In order to avoid this regulation, Li Zairong repeatedly bribed the then President Park Geun hye in exchange for the government’s support for the merger of two SamSung group enterprises, namely, Samsung products and first wool, so as to greatly reduce the inheritance tax generated by his inheritance of SamSung group.
In October 2016, after the incident that Cui shunshi, the close friend of President Park Geun hye, was involved in politics by his cronies, the case of Li zaireng, who used to help with Cui shunshi, also came to the surface.
According to investigation, Li Zairong has offered bribes as high as 43.3 billion won (about 249 million yuan) to park Geun hye and Cui shunshi.
On February 17, 2017, the South Korean procuratorate arrested Li Zairong. On February 28, he formally filed a lawsuit against him.
During the trial, Li Zairong cried: “I am the victim of the president’s forced investment. Who can refuse the president’s request?”
However, the final trial was still unfavourable. The first trial was sentenced to five years’ imprisonment. Li spent one year in prison as soon as he took over the post in Rongfu.
Subsequently, after repeated appeals, Li Zairong’s bribery case ushered in the final judgment of the second instance. The criminal division of the Seoul High Court announced that he was sentenced to two years and six months’ imprisonment with a four-year suspension of execution.
Li zaireng was released in court.
However, the pressure has not completely disappeared.
In South Korea, chaebol economy is the cornerstone of South Korea’s economy, and also related to the lifeline of the national economy. Behind various modern enterprises, there are often large-scale and diversified family ownership and management.
In addition to Samsung, Hyundai, LG, SK and other large-scale companies are behind the hereditary system of the chaebol.
Three generations of leaders of Samsung: Li Bingzhe, Li Jianxi and Li zaireng
For example, after Zheng Zhouyong, the founder of modern group, his younger brother Zheng Shiyong, his son Zheng Menglong and Zheng Mengxian successively served as the president. After the death of President Zheng Mengxian, the chairman of modern group is now Zheng Mengxian’s wife xuanzhenyin.
Another example is SK group. The founder Cui Zhongjian later took over to his younger brother Cui Zhongxian, and Cui Zhongxian asked his son Cui Taiyuan to take over the president of SK group.
LG Group is no exception. The founder of the association took over the leadership of his son, Fu Chiu, and later Sun Tzu became the third-generation president. And the current fourth generation president, you Guangmo, is the son (nephew) of his younger brother and his adopted son.
Under such a background, Li zaireng, who was caught in the braid, has become an important key for the authorities to open up the situation.
In May 2020, Li Zairong announced at a press conference that there would be no hereditary system in Samsung Group. He apologized to all the citizens for the company’s operation and other issues, saying that he had “no idea to inherit the management right of the company to his children”.
After three generations of chaebols, the first crack finally appeared on the ice.
On February 10, 2020, a Korean film named “parasite” won the first Oscar for best picture in non English in the history of Oscar.
The film pushes the reality of South Korea’s “gap between the rich and the poor” to the extreme, pointing at the chaebol group behind it.
Interestingly, at the Oscar ceremony, the person who gave the final speech was not the director of the film, but a woman named Li Meijing.
In fact, we are not unfamiliar with her identity. She is Li Jianxi’s niece and Li Mengxi’s daughter. And CJ group, the giant beast behind her, was born out of the original Samsung’s first sugar making company.