The late chairman of Samsung Electronics Lee Kun-hee declares “New Management” in 1993. (Image courtesy of Samsung Electronics)
SEOUL, Jun. 7 (Korea Bizwire) – On the 31st anniversary of Samsung’s famous “New Management” declaration by its late chairman, Lee Kun-hee, a sense of crisis is gripping the tech giant as it grapples with declining profits and an unprecedented labor dispute.
Since Lee’s groundbreaking speech in Frankfurt in 1993, where he warned that Samsung risked becoming like a “cancer patient” if it didn’t prioritize quality, the company has transformed into a global powerhouse. His rallying cry ushered in sweeping internal reforms, from overhauling personnel policies to fostering a more creative corporate culture.
But three decades later, Samsung finds itself at another inflection point as it confronts challenges on multiple fronts. Its semiconductor division, long the crown jewel, recorded staggering losses of $15 billion last year. The company has also been criticized for falling behind rivals like Nvidia in high-bandwidth memory technology.
In the smartphone market, Samsung ceded the No. 1 position to Apple in global shipments while fending off fierce competition from Chinese manufacturers. Even Samsung’s TV and appliance business reported operating profits merely half that of its domestic rival, LG Electronics, in the first quarter.
The mounting pressures have effectively placed Samsung under an emergency management system. Senior executives have been mandated to work a six-day week, a practice previously limited to certain development and support divisions. The semiconductor unit’s leadership was recently overhauled, with Jun Young-hyun appointed as the new head.
Most alarmingly, on June 7, Samsung Electronics faces its first-ever strike by the company’s main labor union. The National Samsung Electronics Union, representing about 22% of the workforce, has demanded an overhaul of the wage system and performance-based bonuses tied to operating profits.
The union has instructed its 28,000 members to use paid leave for a one-day walkout on June 7, following the Memorial Day holiday. Membership has surged from under 10,000 last year amid growing disillusionment over compensation.
However, a separate in-house union affiliated with a more conservative nationwide labor group has criticized the strike as a ploy to join a more militantly pro-labor umbrella group, rather than an effort to improve working conditions. It has alleged misconduct by union leaders in inflating membership numbers.
“When New Management was declared, executives and employees alike were united in overcoming challenges,” said one industry observer, who spoke on condition of anonymity. “It’s regrettable that a strike is unfolding at this pivotal moment when company-wide efforts are needed to surmount the current crisis.”
Kevin Lee (kevinlee@koreabizwire.com)
