“I will not pass the company’s managerial rights to my children,” said Samsung Electronics heir and Vice Chairman Lee Jae Yong, before bowing down at a 90-degree angle amid the frantic sound of camera shutters. At the televised press conference for his public apology that made headlines across the country on May 6, Lee attempted to put a lid on the controversy surrounding Samsung’s management succession and labor union policies. Although further details have not yet been released, it seems clear that the apology has brought with it a wind of change in Korean society.

Samsung Electronics, one of Korea’s leading enterprises, has long been the subject of criticism for their leadership succession practices and their alleged attempt to dismantle labor unions. On May 6, Samsung Electronics heir and Vice Chairman Lee Jae Yong held a televised press conference in which he issued a public apology for the aforementioned controversies, promising to “create a new Samsung worthy of Korea’s national dignity.” The press conference was Lee’s first official appearance before the media since his apology in 2015 regarding the controversy around the Samsung Medical Center during the outbreak of the Middle East respiratory syndrome.

Lee’s apology follows the demands from Samsung’s compliance monitoring committee in March for a public apology regarding the firm’s controversies. This committee, led by the former Justice Chief Kim Ji Hyung, was established within the firm in February under the order of Justice Jeong Joon Young to “arrange strict compliance monitoring policies” within Samsung.

The End of an Era

Although the apology touched upon several topics, the one aspect that is especially worth paying attention to is Lee’s pledge to not pass on the management rights of Samsung to his heirs. Samsung is famous for its hereditary succession of leadership for three consecutive generations, which seems to have finally come to an end with Lee’s official pledge. “I will ensure that there is no more controversy regarding our management succession,” he said, assuring the public that the firm would run strictly by the book.

Samsung’s statement regarding its leadership succession is an “ideal” change, says Professor Kim Dong-One (College of Business Administration). “There is no correct answer to corporate governance. What is important is whether someone has the competence and capability to lead a business, rather than whether they are from the owner family or not.” Pointing to the examples of foreign businesses such as Toyota and Ford, he also suggested “that one must not eliminate the possibility of someone from the owner family returning to the leadership position when they are needed by the business.”

With regard to the labor union controversy, Lee ensured that Samsung will no longer be accused of union-free management, promising to “guarantee labor’s three primary rights and help establish a healthy labor culture.” This also seems to be a “positive development,” says Professor Kim. “The electronics industry often needs swift and confidential management, which is why most businesses in the industry do not have a labor union,” he explained. “However, even with the nature of the industry taken into consideration, Samsung has been subject to criticism regarding its union-free management. With his pledge, Vice Chairman Lee has managed to resolve what his predecessors have not been able to.”

For the past several decades, Samsung has kept to their union-free management policy, with allegations of dismantling various labor unions such as the Cheil Industries labor union in 1960, and the Cheil Jedang labor union in 1977. Indeed, Lee’s apology seems to have brought this tradition to an end.

Mixed Reactions to the Apology

The apology has prompted mixed reactions from the public, yet many see in it a chance for improvement, positivity, and change. A corporate giant like Samsung acknowledging its faults and taking the lead in practicing ethical governance is definitely a big step forward in terms of business ethics. In particular, there is no doubt that Lee’s pledge to give up Samsung’s three-generation long leadership succession is music to the ears of the Korea Fair Trade Commission (KFTC). “The apology will not only benefit Samsung’s economy but also Korea’s economy, as good governance maximizes enterprise value,” says KFTC Chairman Joh.

Even so, Lee’s apology has not been welcomed by everyone. Civic organizations have criticized the apology for being nothing more than a “non-apology apology” to reduce Samsung’s sentence in the ongoing trial. The Samsung S1-Welstory labor union echoed the same concerns in their press conference held on May 11, in which they claimed the apology was simply “for show.”

Meanwhile, the Federation of Korea Trade Unions (FKTU) emphasized the need for action rather than words. Regarding Lee’s press conference, the FKTU expressed its views that Samsung would do better with “one act in practice, rather than a hundred words,” casting doubt on whether Lee’s apology will bring about tangible results. Several labor unions under Samsung have expressed similar sentiments, urging that practical policies be implemented to address its problems, rather than a mere apology.

Turning Crisis into Opportunity

Giant enterprises such as Samsung hold great influence socially, politically and economically, which inevitably puts a great deal of responsibility on their shoulders. As influential as they are, these businesses often face situations of crisis. However, by acknowledging its faults and promising change, Samsung seems to have turned its crisis into an opportunity.

Chairman Lee’s statement appears to be a part of Samsung’s endeavors to keep its competitive edge,” says Professor Kim. “Samsung is the only Korean business that is considered to be at the top globally, and there must be continuous efforts to maintain its status, for the good of our nation.” Lee’s apology certainly seems to have set an example for other businesses to embrace change with a more reflective attitude. If accompanied by the right actions, Samsung’s statement will open doors to a brighter future for itself and the nation.