Miky Lee tries to rise to challenge at South Korea’s CJ Group

Home > Entertainment > Miky Lee tries to rise to challenge at South Korea’s CJ Group

Miky Lee tries to rise to challenge at South Korea’s CJ Group

Posted on: February 22nd, 2014 by tommyj

Click here to view original web page at www.washingtonpost.com

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. The 55-year-old granddaughter of Samsung Group’s founder shows no sign that 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.

“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” (monopolies), empower women and promote creative businesses to spark growth.

Park said 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. “Having all economic participants grow to their potential, co-exist 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 increasing 2 percent in 2012, the slowest pace in three years, gross domestic product is growing faster. The finance ministry predicts growth will hit 3.9 percent this year, up from 2.8 percent last year. Korea is No. 2, behind China, in Bloomberg Markets’ ranking of promising emerging markets for investors.

Miky Lee helped make South Korean movies and music a multibillion-dollar industry. Lee Mie Kyung, as she’s known in Korea, and Lee Jay Hyun, who turns 54 on March 19, transformed the sugar and flour refiner their grandfather founded in 1953 as Cheil Jedang 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, to about $26.3 billion, between 1995 and last year.

Today, CJ’s 4-D theaters surprise moviegoers with motion, wind and scent, and the splashy Mnet Asian Music Awards, known as MAMA, celebrate 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.

David Geffen, who 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 neophyte studio’s movies in Asian countries other than Japan. The Lees parlayed the deal into a 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.”

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 the 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.

“We are fighting to prove he’s not guilty,” says his attorney, Kim Yong Sang.

‘More like a start-up’

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 start-up 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 flavor-enhancing nucleotides 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.

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.”

Lee’s life has had its surprises and challenges. She says she never expected to lead a large conglomerate. (She thought she’d become a professor.) And during her 20s and 30s, a hereditary neurological disorder
that affects motor and sensory nerves flared up 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 with the illness, aided by meditation.

She says her mission is to fulfill her duty as a business leader, as her grandfather once did, keeping 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 authoritarian South Korean leaders is over. “I see myself as a connector linking people and businesses,” she says.

In December, she hosted a showing of Korean films at New York’s Museum of Modern Art, where Korean directors and actors met executives from U.S. companies, including Viacom and Imax.

“The fact that she’s communicating for the first time through a media interview is a very encouraging sign,” says Kang Sung Boo, head of fixed-income research at Shinhan Investment, who specializes in corporate governance of chaebol.

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 ages 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 rise in the value of the won. The currency gained 3.7 percent against the dollar and 5.6 percent against the yen in the six months that ended Feb. 3.

Shopping mania

Shares of CJ O Shopping, the world’s No. 2 home-shopping service in gross sales, behind QVC, 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 Dec. 1, selling $2.3 million of Siberian goose-down jackets in 49 minutes. CJ’s outdoor clothing unit designed the jacket, and a celebrity wore it on a popular reality show on CJ E&M’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.

Restaurant unit CJ Foodville 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 14 today — with Psy promoting the brand.

China, where CJ makes $4 billion in 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, Korea’s biggest multiplex chain operator, runs 87 4DX theaters in 22 countries, including 19 in Mexico.

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 the Lee & Ko law firm 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 in 1999, according to the Korea Film Council. That rose to 4.12 in 2013, more than the 3.88 for the United States, 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” — a Chinese-language film CJ E&M and Chinese companies 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.

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 JS Communications

The Lees lived with Samsung founder Lee Byung Chull — the grandfather 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 received a master’s degree in East Asian studies from Harvard 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. She volunteered as a teaching assistant, and future World Bank President Jim Yong Kim, one of her students, became a close friend.

“My lifetime obsession to promote the Korean culture started then,” she says.

Miky joined Cheil Jedang in 1994 and, the next year, 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.

At the headquarters of CJ’s food-related businesses, there is 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, who recalls carefree days at her grandfather’s home a half-century ago, says his motto remains relevant.

Lee Byung Chull never stopped thinking about the next big trend. He produced computer chips during his time and would be building lifestyle companies now, she says.

“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.”

The full version of this Bloomberg Markets article appears in the magazine’s March issue.

Tags: , , , , , , ,

Comments are closed.