Restored Samsung ‘control tower’ to foster new businesses

Restored Samsung ‘control tower’ to foster new businesses. November. 23, 2010 13:04. sukim@donga.com sublime@donga.com.

Samsung Group has restored its Strategic Planning Office, also known as its “control tower,” as part of accelerating efforts to carve out new businesses for fostering future-oriented growth.

Samsung Electronics Vice Chairman Kim Soon-taek has been appointed chief of the office for shaping and launching the conglomerate’s key initiatives.

Immediately after Lee Kun-hee returned as Samsung chairman, the group laid out a plan to invest 3.3 trillion won (2.9 billion U.S. dollars) in bio-pharmaceuticals and medical devices. The group has since stepped up investment to secure skilled personnel and R&D sites.

Competition among provinces is also intensifying to build sites for the two sectors for Samsung.

○ R&D centers for bio-pharmaceuticals and medical devices

Electronics industry sources said Monday that Samsung Techwin in April built an R&D center for diagnostic reagent and equipment in the Pangyo area of Seongnam, Gyeonggi Province. Samsung Electronics is also in talks with Gumi, North Gyeongsang Province, on building a medical device R&D center.

North Chungcheong Province, which has Osong Life Science Complex, Daegu, which has a medical complex, and Gyeonggi and Gangwon provinces are competing to land Samsung’s biosimilar and medical device R&D centers.

Given the cancellation of the revised development plan for Sejong City, sources say Samsung has no reason to delay the promotion of new businesses and will announce the area, scale and timing of investment by early next year.

A Daegu city official said, “Daegu Mayor Kim Bum-il has already met Samsung Electronics Vice Chairman Kim Soon-taek a number of times to discuss building a biosimilar mass production facility for Samsung in Daegu.”

The city recently concluded a memorandum of understanding on building a medical device R&D center with diagnostic ultrasound manufacturer Medison. Samsung and SK have submitted bids to take over a share of the company.

Daegu is expecting additional spillover effects from Samsung’s potential winning of the Medison bid.

Samsung is also known to have started clinical trials of anti-cancer and arthritis drugs in the biosimilar sector. A pharmaceuticals source said, “Samsung has accumulated genetic information and recruited prominent foreign scholars. It has already completed R&D and is ready to sell these drugs.”

The conglomerate is also advancing its solar cell sector. Samsung Fine Chemical announced Nov. 9 its advance into the key polysilicone business.

The group is seeking a vertical integration in this sector, including solar cells, module production (Samsung Electronics) and establishment of power plants (Samsung Everland).

○ Strategic Planning Office to lead new businesses

In reestablishing the Strategic Planning Office, Samsung made it clear that it will change its previous top-down system of decision-making by keeping in check Lee Hak-soo and Kim In-joo, formerly the top two aides to Lee Kun-hee when they worked at the office.

The office will shift its focus from controlling and supervising the conglomerate’s affiliates to fostering alternative businesses to semiconductors, mobile phones and TVs.

Vice Chairman Kim told journalists Monday, “The focus of our new control tower will be on the future rather than the past. It will focus on fostering promising new businesses and also promote mutual communication and growth.”

“The chairman told me to stay focused on good individuals and the future.”

On his return to the group in March after a hiatus of nearly two years, Chairman Lee said, “A crisis is occurring. Top-tier global companies are falling. There`s no guarantee that Samsung will be an exception. Over the next 10 years, products that now represent Samsung will mostly disappear. We have no time to hesitate.”

His return clearly signaled the reestablishment of the control tower to support his son Lee Jae-yong as his successor and foster new growth engines by the conglomerate.