Shinsegae Group Chairman Chung Yong-jin speaks during a meeting with the company's new employees at Shinsegae Namsan training institute in Seoul in this Feb. 26 file photo. Courtesy of Shinsegae Group
Shinsegae Group decided to replace the CEOs of SSG.com and Gmarket, as the e-commerce subsidiaries have failed to make profits, the conglomerate said Wednesday.
SSG.com CEO nominee Choi Hoon-hak, left, and Gmarket CEO nominee Chung Hyung-kwon / Courtesy of Shinsegae Group
Choi Hoon-hak, who is in charge of directing SSG.com's sales division, was nominated as the successor to dismissed CEO Lee In-young, who had become the e-commerce firm's sole leader nine months ago. Last September, Shinsegae fired former SSG.com co-CEO and E-mart CEO Kang Heui-seok, who previously worked as a government official and a Bain & Company consultant.
The Gmarket CEO seat will go to former Alibaba Korea General Manager Chung Hyung-kwon, following the dismissal of Chun Hang-il, who had worked for the e-commerce firm even before Shinsegae's acquisition of eBay's Korean operation.
Both SSG.com and Gmarket also reorganized to streamline their management. Multiple other senior executives were reportedly asked to leave the companies.
“We have continued to pursue innovation to take another leap in the online platform market,” a Shinsegae Group official said. “We will solidify our status as the nation's leading retail company.”
The recent executive reshuffle came two months after the replacement of the Shinsegae E&C CEO, under the leadership of Shinsegae Group Chairman Chung Yong-jin, who was promoted to the top post in March. Amid the worsening profitability of the group's flagship retail business, Chung has ordered a large-scale restructuring over the past three months.
Former heads of Shinsegae's e-commerce units pose during the Shinsegae Universe Festival at COEX in Seoul in this June 2023 file photo. From left are then SSG.com co-CEO Lee In-young, SSG.com co-CEO and E-mart CEO Kang Heui-seok and Gmarket CEO Chun Hang-il. All three have since been dismissed from their posts. Courtesy of Shinsegae Group
In March, E-mart carried out a voluntary redundancy program for the first time since the discount store chain's establishment in 1993. E-mart Everyday, another Shinsegae subsidiary supervising supermarkets, also decided to carry out a voluntary redundancy program this month, ahead of its merger with E-mart next month.
SSG.com is also said to be preparing for a large-scale restructuring, as the company has never made any profits since its launch in 2019. Gmarket has also failed to make profits since Shinsegae acquired the e-commerce firm from eBay.
Earlier this month, the two e-commerce firms tasked CJ Logistics with the delivery of all of their products to reduce logistics costs. SSG.com is even considering selling its logistics centers to CJ.
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However, some market observers point out that the Shinsegae chairman is the main reason behind the worsening profits.
“There were no remarkable achievements when Chung was serving as a vice chairman,” said Lee Nam-woo, chairman of Korean Corporate Governance Forum (KCGF), which consists of capital market insiders and legal experts who seek to improve corporate governance in Korean companies.
Given that E-mart posted its first-ever annual operating loss under Chung's leadership last year, the KCGF urged him to register as a director, to demonstrate responsible management.
“The current crisis surrounding Shinsegae Group appears to be resulting from Chung's attempt to avoid responsibility while enjoying huge compensation,” Lee said.