Miky Lee, vice chairman of CJ Group, beams as she greets a visitor in the executive lounge of South Korea’s biggest purveyor of food, home-shopping services, TV programs and movies. Wearing a black top, charcoal leggings and midcalf Michael Kors sneakers, the 55-year-old granddaughter of Samsung Group’s founder shows no sign it’s been a traumatic few months.
Settling in for her first major interview, Lee opens up about how she’s leading the shaken Samsung offshoot after CJ Group Chairman Lee Jay Hyun, her younger brother, was arrested in July, Bloomberg Markets magazine will report in its March issue.
“I’m now working longer, talking to more people, taking care of a lot more things, including the balance sheet,” she says in a room dominated by a portrait of Lee Byung Chull, her grandfather. “CJ will get back on track.”
Lee is leading Seoul-based CJ Group during a pivotal time for South Korea. President Park Geun Hye, who took office in February 2013, has promised to crack down on chaebol, empower women and promote creative businesses to spark growth.
Park told Bloomberg News in a Jan. 10 interview that her administration is determined to quash unfair business practices. She tempered those comments by saying she doesn’t want to saddle companies with excessive rules.
‘Important Objective’
“Having all economic participants grow to their potential, coexist and develop in harmony in a fair-market environment is our most important objective,” she said.
South Korea’s economy is picking up as Park begins her second year. After expanding 2 percent in 2012, the slowest pace in three years, gross domestic product growth will accelerate to 3.9 percent in 2014 from 2.8 percent in 2013, the finance ministry predicts. Korea is No. 2, behind China, in Bloomberg Markets’ ranking of promising emerging markets for investors.
Miky Lee helped fashion South Korea’s movies and music into a multibillion-dollar industry. Lee Mie Kyung, as she’s known in Korea, and Lee Jay Hyun, who turns 54 on March 19, turned a sugar and flour refiner their grandfather had founded in 1953 called Cheil Jedang Corp. into the country’s 14th-biggest conglomerate.
Lee Jay Hyun, known as Jay in international circles, changed the name to CJ Group in 2002. He established CJ Corp., the group’s holding company, in 2007. Revenue from CJ Group’s 76 units soared more than 16-fold from its start as Cheil Jedang in 1995 to about 28.5 trillion won ($26.3 billion) last year.
Psy’s Praise
Today, CJ’s 4-D theaters surprise moviegoers with motion, wind and scent, and the splashy Mnet Asian Music Awards, known as MAMA, honor the region’s musicians.
Pop singer Psy says he was skeptical when Miky Lee began staging MAMA outside Korea in 2010. Psy came around after seeing MAMA’s popularity grow, drawing Stevie Wonder to jam with K-pop star Hyolyn and singer Aaron Kwok in Hong Kong in November.
“MAMA is one of the flowers that came into bloom by Vice Chairman Lee’s insight, who always dreamed of music and culture making all of us one,” Psy says.
David Geffen, who co-founded U.S. film studio DreamWorks SKG with Jeffrey Katzenberg and Steven Spielberg, says the Lees built their entertainment empire from scratch.
“It’s remarkable that they have gone from absolutely nothing in entertainment to incredibly successful,” he says.
At Miky’s urging, Cheil Jedang invested $300 million in DreamWorks in 1995 and won the right to distribute the then-neophyte studio’s movies in Asia outside Japan. The Lees parlayed the deal into their lucrative shift into entertainment.
“Their intention was to learn from this investment so they could build in Korea a great media company, which they did and quite a bit more,” he says. “It’s an indication of how good they are.”
Little Known
As CJ grew, Miky claimed less of the spotlight than Jay.
“Other than her close ties to her brother, which is rare among Korea’s wealthiest families, and her success in media, little is known about her,” says Kim Sang Jo, director of Solidarity for Economic Reform, which promotes minority shareholders’ rights.
Jay was the big-picture guy.
“Lee Jay Hyun talked about businesses that didn’t yet exist in Korea,” Kim says. “He’s a strategist and a big shoe to fill.”
Miky is raising her profile in Jay’s absence. As Park began her chaebol crackdown last year, prosecutors arrested him on charges of tax evasion, embezzlement and breach of trust.
Imprisoned in July, he underwent a kidney transplant in August. His trial began in December. The charges relate to personal taxes, and Lee Jay Hyun didn’t cause losses at his companies, Kim Yong Sang, his attorney, says.
“We are fighting to prove he’s not guilty,” he says.
‘Familiar Job’
CJ Group appointed Miky to a new, four-person governing committee after Jay’s arrest in July. Maternal uncle Sohn Kyung Shik, 74, who was named co-chairman with Jay then, and two outside managers complete the quartet.
Miky Lee describes her role as CJ Group’s de facto chief executive officer. She says that doesn’t mean she’ll get the chairman’s title in Jay’s absence: In practical terms, titles don’t change anything, she says.
“It’s a familiar job,” she says. “We have been more like co-founders of a startup where he formed strategies and I carried them out.”
Lee is poised to show that her instincts for what’s hot in K-pop can augment the revenue from CJ products such as nucleotides that enhance flavors and frozen dumplings.
Businesses outside her entertainment bailiwick generated 83 percent of CJ’s revenue in 2012. At stake is how the conglomerate, with revenue that accounts for 2.4 percent of South Korea’s GDP, will emerge from its crisis.
Katzenberg’s Recollections
DreamWorks’ Katzenberg recalls Lee’s drive. When they met in 1995, she told him she wanted to create a multimedia giant from a Korean industry that barely existed.
“I thought, ‘Well, this is going to be interesting,’” Katzenberg says. Today, Lee has exceeded his expectations. “I hold her in extraordinarily high esteem as a businesswoman, a manager and a leader,” Katzenberg says.
Lee says she never expected to lead a large conglomerate, thinking she’d become a professor. During her 20s and 30s, a neurological disorder she inherited called Charcot-Marie-Tooth flared up. The condition affects motor and sensory nerves, and left her with a limp.
“When you have such a condition, you feel a lot of anger at first,” she says. “You don’t know why this is happening.” Lee, a Buddhist, says she has come to terms, aided by meditation.
Fulfilling Duty
“Now I know God has given this to me for a reason,” she says, explaining that her mission is to fulfill her duty as a business leader, as her grandfather once did.
Lee says her goal is to keep CJ profitable and efficient as it expands overseas.
“The world I am dreaming of is one where people all over the world eat Korean food once a week, listen to Korean music sometimes and watch a Korean film twice a year,” she says.
As for her management style, Lee says the era of South Korea’s authoritarian leaders is over. “I see myself as a connector linking people and businesses,” she says.
In December, she hosted Korean films at New York’s Museum of Modern Art, where Korean directors and actors met executives from U.S. companies including Viacom Inc. and Imax Corp.
Such leadership can infuse CJ Group with a welcome openness, says Kang Sung Boo, head of fixed-income research at Seoul-based Shinhan Investment Corp. who specializes in corporate governance of chaebol.
‘Encouraging Sign’
“The fact that she’s communicating for the first time through a media interview is a very encouraging sign,” he says.
Lee is doing her part to promote her country’s culture. She started the KCON annual convention devoted to K-pop, Korean film and food in Los Angeles. In January, she traveled to Davos, Switzerland, to showcase South Korean cuisine at a party President Park hosted.
Lee has Asia’s youth on her side. Some 750 million people aged 15 to 24 live in the Asia-Pacific region, according to the United Nations. They’re prime targets for CJ’s online games, shopping, concerts and bibimbap, the signature rice-bowl dish at its Bibigo restaurants.
With most sales still at home, some CJ units are rare beneficiaries of the won’s rise. The currency gained 3.7 percent against the dollar and 5.6 percent against the yen in the six months ended on Feb. 3.
Shopping Mania
Shares of CJ O Shopping Co., the world’s No. 2 home-shopping service in gross merchandising sales, behind West Chester, Pennsylvania–based QVC Inc., gained 16 percent as of Feb. 3 following Lee’s arrest on July 1. It hit an all-time high of 426,100 won on Jan. 2.
Lee is exploiting links between CJ’s businesses to multiply sales. CJ O Shopping broke a South Korean record on Dec. 1, selling $2.3 million of Siberian goose-down jackets in 49 minutes.
In a marriage of shopping and entertainment, CJ’s outdoor clothing unit designed the jacket and a celebrity wore it on a popular reality show on CJ E&M Corp.’s tvN cable channel, sparking a buying stampede. Star pitchwomen promote upscale products, texting on air and gossiping about their husbands to hook customers.
CJ is taking this business formula to China, Vietnam, Indonesia, Japan, the Philippines, Thailand, Turkey and even Latin America. CJ O Shopping predicts overseas sales from TV-based shopping will top domestic revenue for the first time in 2015. The company aims to surpass QVC by 2020.
Bibigo Restaurants
Restaurant unit CJ Foodville Corp. has big plans, too. It runs more than 160 eateries overseas, from New York to Cambodia. Lee wants the Bibigo chain to grow to 740 outlets outside Korea by 2020, up from just 14 today -- with Psy promoting the brand.
China, where CJ gets $4 billion of annual sales, is its biggest market. CJ has made inroads with animal-feed factories, home shopping, VIPS steakhouses and the multisensory 4DX theaters. Lee plans new restaurant brands and additional theaters and shopping channels.
Lee’s passion remains entertainment. She and Jay built South Korea’s first multiplex at the height of the 1998 Asian financial crisis. The inaugural movie, “The Prince of Egypt,” sold out on all 11 screens for all showings.
Other venues have screens on three walls and fine dining. CJ CGV Co., Korea’s biggest multiplex chain operator, runs 87 4DX theaters in 22 countries, including 19 in Mexico.
Lee’s ‘Snowpiercer’
Lee herself has produced several movies. In the latest, a $40 million sci-fi thriller called “Snowpiercer,” people jam a massive train fleeing a new ice age.
“Today, it seems like jumping into entertainment is a no-brainer,” says Choi Chunghwan, an entertainment partner at Lee & Ko in Seoul, who says he spoke with Lee about the industry over lunch back in 1998. “Then, it was an audacious business decision.”
South Koreans on average saw 1.17 films at cinemas a year in 1999, according to the Korea Film Council. That rose to 4.12 in 2013, more than the 3.88 for the U.S., market researcher Screen Digest says.
“People wonder how Korean films became so cool overnight,” Choi says. “It’s really her vision and capital that made it all possible.”
CJ’s next step is movies and music that appeal to cultures worldwide. “A Wedding Invitation,” the Chinese-language film CJ E&M and Chinese companies co-produced and South Korea’s Oh Ki Hwan directed, features lovers who reunite after a falling-out. It became China’s top romantic box-office hit when it opened in April.
Global Ambition
“I see no reason why we can’t do in the content business what Korean companies have done in mobile phones and cars,” Lee says.
Still, she says, it’s easier for traditional, manufacturing-centric chaebol to go global than a company that promotes lifestyles and was founded on the principles of convenience, health and joy.
“The production line will churn out the same product rain or shine,” Lee says. “We interact with our customers directly, and that requires soft skills, care and sophistication. It’s more challenging.”
For all her Korean boosterism, Lee was born in Tennessee, where her father attended the University of Tennessee. The family moved back to Seoul when she was 3. Lee and Jay were joined by brother Lee Jae Whan, now 51, who runs an advertising agency called JS Communications Co.
Samsung Dynasty
The Lees lived with Samsung founder Lee Byung Chull, who was building one of South Korea’s biggest business dynasties, before they moved down the block. Every morning, grown-ups and cousins gathered at the grandparents’ house for breakfast before work or school.
Miky Lee graduated from the elite Seoul National University in 1981 with a degree in home economics, a popular major for women at that time. After studying the Chinese language at National Taiwan University and the Japanese language at Keio University in Tokyo, she enrolled at Harvard University.
She earned a master’s degree in East Asian studies there in 1986 and then studied Chinese literature and history at Fudan University in Shanghai. She married financier Kim Seok Ki; the couple later divorced.
Lee says her years at Harvard showed her South Korea’s dismal international standing. Harvard’s Korean-language classes attracted few students because Korea was little known, so she volunteered as a teaching assistant. Future World Bank President Jim Yong Kim, one of her students, became a close friend.
‘Lifetime Obsession’
“My lifetime obsession to promote the Korean culture started then,” she says.
In 1993, Samsung Chairman Lee Kun Hee, Miky’s uncle, unexpectedly offered the deal that sparked CJ’s empire. Chairman Lee proposed to Miky’s mother, Sohn Bok Nam, that she swap her stake in what is today Samsung Life Insurance Co. for his stake in Cheil Jedang. She agreed.
Miky joined Cheil Jedang in 1994 and plunged into the DreamWorks investment. She never forgot Geffen’s advice: “You can have the greatest idea in the world, but at the end of the day, the key is, who’s going to execute it?” he said.
The headquarters of CJ’s food-related businesses hold a reminder of the challenges ahead. A hologram of Lee Byung Chull seems to move as if surveying passersby. His corporate philosophy is written nearby: Contribute to the national economy, value talent and promote rational management.
Miky Lee, recalling carefree days at her grandfather’s home half a century ago, says his motto remains relevant.
Lee Byung Chull never stopped thinking about the next big trend. He fashioned computer chips during his time and would be building lifestyle companies now, she says.
Grandfather’s DNA
“For him, it was never about, ‘Let’s make lots of money so I can live comfortably,’” she says. “Rather, it was about creating new industries, jobs and heroes, thereby contributing to the nation. My brother and I live in his legacy. We have that DNA.”
Without her grandfather, or her brother Jay, Miky Lee will have to muster the determination that helped her turn a sugar refiner into an entertainment behemoth as she steers CJ through crisis.
Some longtime enthusiasts say she’s up to the task.
“All I’ll say is, don’t bet against Miky Lee,” DreamWorks’ Katzenberg says.
To contact the reporter on this story: Yoolim Lee in Singapore at yoolim@bloomberg.net
To contact the editor responsible for this story: Michael Serrill at mserrill@bloomberg.net
