Who would still start a business seriously after being reborn?

Chapter 673 It's better to rely on yourself than to ask for help

Lee Jae-yong's brows furrowed slightly.

Waters' words pinpointed his recent anxieties.

Samsung's success in the consumer electronics sector largely relies on its vertically integrated model, from chips and panels to end-product manufacturing. If upstream automotive electronics orders falter, it will have a profound impact on Samsung's very foundation.

This issue has been discussed many times within their group.

“This isn’t just about automotive electronics,” Waters pressed on, “but mobile phones are your core battleground. Nokia and Motorola, those two old monsters, are stuck in their ways and completely unaware of the impact that BBA (BMW, Mercedes-Benz, Audi) phones will have on them. But what about you?”

“I know you and Apple are competing and trying to break through to bring mobile phones into a completely new field. But even if you enter that field, you will face a monster competitor with top brand endorsement, mature high-end channels and potential European policy protection. Their starting point is too high, so high that you traditional mobile phone manufacturers look like children rolling in the mud.”

Waters stopped talking and observed Lee Jae-yong's reaction.

Seeing the grim look on Li Zairong's face, he said, "President Li, the rise of Momo's system in China has proven how formidable Enze Capital and its technical team are. They have no shortage of technology, no shortage of funds, and now they have no shortage of brands and channels. If we cannot restrain Momo Group in China and make Momo Group continue to inject funds into Enze Capital, then soon we will be facing a behemoth that spans Eurasia and has a strong voice in operating systems, software applications, hardware manufacturing, and content channels."

"At that point, it won't just be a matter of the 30 billion deposit, but rather a matter of Samsung's position in the global technology supply chain."

The meeting lasted for more than an hour. Waters felt that his words had touched Lee Jae-young's soul, so he left South Korea without waiting for Lee Jae-young to give a definite answer.

Lee Jae-young returned to his office and locked himself in his room alone.

He turned on the television in his office, which played an edited clip of Smith Reibus, chairman of Enze Capital, speaking at the BMW Welt conference in Munich, Germany.

Leibusi's English, with its old-fashioned aristocratic accent, his domineering gaze, and his declaration that Europe would never be absent, were like a burning stick tapping on Li Zairong's head.

He would look at it once, and then tap it with the fire poker.

But he still kept replaying and watching it again and again.

Microsoft's Waters visit presented him with a difficult choice.

Cooperation means voluntarily violating the truce agreement with Momo Group, the $30 billion deposit will evaporate instantly, and a complete confrontation with Cheng Yi and the mysterious Enze Capital behind him will be formed.

If Samsung does not cooperate, it may be able to watch a potential giant emerge that integrates high-end European manufacturing resources and has an independent technological path. In the long run, this would indeed pose a huge threat to Samsung's core business.

This is like an alliance between countries.

Now that he has chosen to join forces with Microsoft, at least he has an ally.

But now he's watching Microsoft and Enze Capital fight. Once Microsoft withdraws from the battle, and it's their turn to fight Enze Capital, they'll have no allies left.

“30 billion US dollars…” Lee Jae-yong muttered to himself with a pain in his throat.

This sum of money is not a major financial blow to Samsung, but it represents a significant amount of money.

This is proof of his defeat in his last confrontation with Cheng Yi, and a powerful weapon that the board of directors and his family's internal opponents can use to attack him.

If he gives up easily, his authority will be seriously challenged.

He hesitated for a long time before slowly picking up the internal phone on his desk and saying, "Have Director Lee from the Strategic Planning Office, Minister Kim from the Legal Department, and President Park from the Semiconductor Business Division come to me immediately."

Before long, the three core executives of Samsung gathered together.

Lee Jae-yong didn't beat around the bush and directly laid out Waters's proposal and his own concerns.

After the words were spoken, the meeting room fell into a brief silence, and then the argument erupted.

Minister Kim of the Ministry of Justice said in a very serious tone: "Vice Chairman, we must be extremely cautious. The ceasefire agreement signed with the Swiss bank has clear terms and strong binding force. If we breach the agreement, we will immediately lose 30 billion US dollars. Moreover, once we are the first to break the agreement, Momo Group will inevitably launch a fierce retaliation in the Chinese market and even in other fields. At that time, we may lose far more than 30 billion."

“Minister Kim, you’re being far too timid,” Director Lee of the Strategic Planning Office immediately retorted. “If we stand by and watch Enze Capital, this outlier, grow stronger because we’re afraid of defaulting and retaliation, that would be the greatest irresponsibility towards Samsung’s future! Please take a look at this report.”

Director Li pushed a thick document to the center of the conference table and said, "This is our analysis of Enze Capital's investment portfolio in Europe over the past three years, compiled using our highest-level intelligence network. They have quietly invested in and acquired more than twenty small and medium-sized semiconductor design companies, precision manufacturing plants, and materials laboratories. These companies are not large individually, but they cover key areas such as power management, RF chips, sensors, and even MEMS processes!"

“Now, through the BBA mobile phone project, they have integrated these scattered technical resources and formed a preliminary closed-loop supply chain. Today they can use it in car mobile phones, and tomorrow they can use it in any consumer electronic device. This is shaking the foundation of our Samsung vertical integration model.”

Pointing to the data in the report, he said with increasing excitement, "Waters is right. This is not ordinary business competition; it is a strategic encirclement. What Enze Capital wants to do is to build a new ecosystem that is independent of the existing US- and South Korean-dominated technology system. Paying $3 billion now is to disrupt their strategic rhythm and to avoid losing $20 billion or $50 billion in our core business in the future, or even completely losing our voice in the next wave of technology!"

"The reason why Cheng Yi, the president of Momo Group, signed this kind of shady contract with us must have been at the behest of Enze Capital. Their goal is to let us sit back and watch the tigers fight!" Director Li said. "The technology industry is different from the physical industry. Let alone Samsung, even PC industry giants Microsoft and Intel, and mobile phone industry giants Nokia and Motorola, can you guarantee that they won't suddenly go bankrupt due to decision-making problems?"

"In the tech industry, there's no such thing as seniority or experience. To survive, we can only master the latest technology and develop the best products. If you fall behind even a little, you'll be ruthlessly abandoned by users, and they might even forget you exist."

Chief Lee's tone was somewhat agitated, clearly angered by Minister Kim's remarks.

President Park of the Semiconductor Division paused for a moment before speaking, saying, "Chief Lee's concerns are not unfounded. Enze Capital's expansion in Europe is indeed worrying. Their approach is to build a technology chain that is decoupled from the US, which poses a long-term threat to our business model that relies on global division of labor."

President Park then changed the subject, saying, "However, cooperating with Microsoft is equally risky. Can we completely trust Microsoft? They're merely using us to counterbalance Enze Capital. If we and Momo Group both suffer heavy losses, will Microsoft turn around and erode our interests? Moreover, hastily declaring war on Momo Group will definitely disrupt our own production plans and customer relationships, causing considerable losses in the short term." "We've already clashed with Momo Group twice, and neither time did we gain any advantage."

"President Park, there's never a win-win situation in this world," Chief Lee said in a deep voice. "Cooperating with Microsoft is both mutually beneficial and a win-win situation. We have hardware manufacturing capabilities and market influence that they can't replace, while they have the software ecosystem and global political resources we need. It's a temporary alliance based on shared interests. As for the losses..."

He looked at Lee Jae-yong and said, “Vice Chairman, we can define this operation as a strategic defensive investment. The $30 billion and the short-term losses caused by the supply chain adjustment can be included in our insurance premiums to combat future systemic risks. We need to find a way to get Microsoft to help us bear part of this cost.”

“But how do we explain the other part to the board?” Minister Kim pressed.

Lee Jae-yong slowly closed his eyes, lay down on the sofa, and quietly listened to the heated debate among his subordinates.

At that moment, he remembered his father's words: "Samsung has been able to rise from crisis after crisis because it has the courage to take big risks and gamble everything at crucial moments."

The current situation is strikingly similar to when Samsung resolutely invested heavily in developing semiconductors to compete with Japanese giants.
Both are uncertain of the future and involve huge risks, but they are also related to life and death in the future.

The system built by European capital carried a sense of loss of control that made him uneasy.

More importantly, they demonstrated exceptional technological integration capabilities and strategic vision.

If Samsung doesn't take advantage of the fact that these companies haven't fully matured yet and join forces with Microsoft to suppress them, Samsung will become extremely passive once they are fully grown.

"I'll contact Nokia and Motorola first and see what they think," Li Zairong finally decided.

Fear and hesitation are the greatest enemies of a leader.

In the past two years, he has matured a lot. His biggest competitor left Samsung to go into the hotel industry, which also made him focus on learning the art of leadership.

His father, Lee Geon-seok, also deliberately wanted to cultivate his leadership skills, giving him a lot of decision-making power. As long as it wasn't a major event that affected the life or death of Samsung, the decision-making power was in Lee Jae-young's hands.

After a moment's hesitation, Li Zairong dialed the number of Nokia CEO Jorma Ollila.

“Vice President Li, you rarely call me,” Jorma Ollila said first.

“Mr. Ollila, I have something very important to discuss with you.” Lee Jae-yong tried his best to keep his tone calm.

Jorma Ollila laughed and said, "Oh? What could be so important to you?"

Lee Jae-yong said, "I believe you have already noticed the establishment of BBA Mobile Communications Company. This company, led by Enze Capital and in conjunction with Mercedes-Benz, BMW, and Audi, aims to do more than just car accessories. They want to create a smartphone that redefines high-end mobile communications."

"They have now integrated ARM architecture, capacitive touch, and the Android system, which undoubtedly challenges our existing industry landscape. I think it is necessary for us to have some communication and explore potential cooperation to cope with future changes."

On the other end of the phone, Ollila's voice carried a hint of Scandinavian calmness, even a subtle arrogance, as she chuckled, "Vice President Li, thank you for the reminder. However, please allow me to be frank: we see dozens of similar disruptive concepts and alliances emerge every year, but the vast majority are like shooting stars in the Scandinavian winter, fleeting and ephemeral."

He paused, then continued, "I don't think that a luxury mobile phone sponsored by a car company and positioned for a mere few million high-end consumers can have any substantial impact on the global mobile phone market, which ships hundreds of millions of units annually. After all, automobiles and mobile phones are two completely different industries. As for Enze Capital... sorry, they are still newcomers in the field of mobile communications."

Ollila's tone was as if she were comforting an overly nervous junior.

Ollila's words made Lee Jae-young very unhappy.

Although Nokia is a Finnish company, it is deeply integrated with American capital. With the support of giants such as Artisan Partners and FMR LLC, Nokia can indeed sit on its laurels. 30% of its market share comes from the United States, and it has more than a dozen R&D centers in the United States.

If Nokia were willing to make a move, given its position in Europe and America, it could easily crush Enze Capital.

However, it seems that this path is not viable at present.

Lee Jae-yong took a deep breath and then answered the call with Motorola CEO Edward Zander.

Zander's response was more direct, carrying the pragmatism and a touch of arrogance typical of American business culture: "Li, I understand your concerns, but in my view, this BBA alliance is more like a bandwagon move by several traditional industrial giants driven by digital anxiety. Their products are likely to be well-received but not commercially successful. Instead of worrying about them, let's talk about how to further strengthen our channel partnerships in the Asia-Pacific region."

Both calls resulted in two equally unfriendly but firm rejections.

Nokia and Motorola, these two giants, have shown typical sluggishness as industry leaders when faced with challengers from other sectors. However, they do have the right to be sluggish.

The greatest martial arts master in the world disdains to spar with a novice who has just started out.

Li Zairong put down the phone, his face so gloomy it could drip water.

The arrogance of Nokia and Ollila, and the shortsightedness of Motorola and Zander, filled him with a strange anger.

He realized that relying on these giants was impossible.

They still have to do it themselves!

(End of this chapter)