Samsung’s Heir Apparent Faces Heated Challenges

New Samsung Chairman Lee Jae-yong

The nomination in September of Samsung’s vice chairman and heir apparent, Lee Jae-yong, to lead the multinational tech giant could not have come at a more difficult time.

Reports had begun to surface of the company’s flagship smartphone, the Galaxy Note 7, bursting into flames, prompting the company to recall 2.5 million devices. The company had hoped to get a head start by unveiling the Note before the introduction of Apple’s new iPhone. However, on October 11, in the wake of several additional incidents worldwide, Samsung announced that it would halt production of the model permanently.

For Samsung, which was broadly criticized and could lose up to $17 billion in revenue, the crisis is a severe blow to its brand. For Lee Jae-yong, also known as Jay Y., it was a baptism by literal fire, and the start of a long uphill climb as de facto chief of South Korea’s largest conglomerate.

The 48-year-old son of chairman Lee Kun Hee, who has been bedridden since a heart attack in 2014, has helped to run the company in his father’s absence. Divorced, with two children, he is considered more diplomatic and globally minded than his father. He speaks Korean, English and Japanese and has acted as Samsung’s liaison with rivals Google and Apple.

Yet very little is known about him. Many South Koreans are apprehensive as he takes control of a company that accounts for one-fifth of the country’s GDP. Although Samsung still generates more than half of its revenue outside the mobile unit, Jay Y.’s leadership will be defined by the Note 7 issue, says Kartik Hosanagar, a professor of technology and digital business at the University of Pennsylvania’s Wharton School. He sees no long-term threat to sales, however, because Apple is Samsung’s only competitor at the market’s high end and “Android users are not going to ditch the entire platform over this.”

Hosanagar is convinced that Samsung will recover, but Jay Y. must still manage the brand carefully: “The challenge will be to hold on and even increase market share. Google is entering the premium smartphone market with Google Pixel. That is something that he will need to deal with.”