"What does wi-ki mean in Korean," President Jurgen Konig asked at the press conference held in the Chosun Hotel on May 18. He continued, "Wi-ki means crisis as a whole, but I learned that the word wi means danger, and ki means opportunity. I learned the true meaning of courage from Koreans. Courage is one of Merck's characteristics that helped the company to last for 341 years." Indeed Merck has been known as the company who invests in terms of generations rather than quarters. Their half-century long research and development of liquid crystals applications is a great example of success through patience and courage.
In 2003, the Chairman of Samsung Group Lee Kun-hee visited the Swedish Wallenburg family with his son, Lee Jae-yong. For more than 150 years, over 5 generations of Wallenburgs have been operating the conglomerate from generation to generation, which has now brought the company to be in possession of half of the Swedish companies that are enlisted in the stock market. Beyond their size and history, the Wallenburgs are well respected and loved by the people of Sweden. Not only has hearing about this company brightened the spirits of Samsung and the Koreans who have heard of their impressions after the visit, but it also motivated all of the listeners to note the philosophy of the Wallenburgs in succession of business to their family members.
In 2009, Merck, who has been known as the hidden gold of the current pharmaceutical and chemical industry, made its first coming out party in public and shared the inspirational story of the Merck Family to share its history, vision, and a strong bond with Korea. Especially in a year like this when a little bit of magic is desperately in need everywhere to survive through the crisis, Merck's knock on the door means way more than a sprinkle of magical spells. It means the inspiration that revives the spirit, and advice that motivates many to start over.
Nearly 350 Years of History Wasn't Just Luck
The Merck family earned its long lasting history of success as a pharmaceutical and chemical company. President Koenig stated a few characteristics of the Merck family that held the company strong. "The first characteristic is the total separation between ownership and management. When the children of the Merck family work as interns in worldwide branch offices, no Merck family member calls the branch for any special request, and the children themselves do not ask for any special favors," said Koenig. This is in contrast to the ways most children of Korean top executives are treated.
As the ownership and management are separated, one of the rules of the Merck family is that they do not work for Merck. "The children of the Merck family are obligated to work as interns at Merck, however, they do not work as regular employees," said Koenig. "Once their internship is over with Merck to get a grip of the system, they move on and get different jobs. Most of them are specialists like doctors, lawyers, professors, and so on, and keep their best interests in Merck outside of the company."
The 120 members of the Merck family believe that the company should be managed by professionals, and therefore, direct management of family members is not allowed. Only large M&A or the establishment of a new company in a new region is decided through meetings of the Merck family. Other management decisions are made by a group of CEOs. This operation system was kept for more than 300 years. The Merck family holds 70 percent of total company shares, and they cannot sell them to a 3rd party.
Don't Go to the Bank, Use Ours
The Merck family has been volunteering to invest their private assets into the company when the company is in need of research funds. "Merck spends US$300 million per year in R&D, and the company raises the money from Merck family member's private assets, not from a bank," said Koenig. He also added that the Merck family even voluntarily raised the amount of investment while reducing dividend income.
Long Term Investment Can Take Generations
Another characteristic of Merck is the courage that allows them to think beyond quarterly profit. "Merck's investment in new technology is considered in terms of generation. Unlike other companies, Merck does not make short term investment for quarterly reports."
Juergen Koenig, CEO of Merck Korea, pointed out the secret to surviving for more than 300 years in the materials industry is long term investment. He explained that in order to develop a new technology for the next generation, investment should be made considering, at least, the next 50 years to be ahead of the competition. Since the end of last year, many LCD panel manufacturers introduced various types of power saving panels, but Merck developed and distributed power saving panels several years ago. Throughout Merck's history and organization, the company preferred to make a long term investment for the next generation than a short term investment for quarterly reports. This October, Merck Korea will open a new W1.4 billion (US$1.12 million) building, the Advanced Center for Technology (ACT), at the city of Pyongteak in Gyeonggi Province. Even during the global economic crisis, Merck was able to grow because of the long term management philosophy."
The Merck group has made 7.6 billion euros (US$10.5 billion) in sales with 30,000 employees over 60 countries around the world. Merck Korea was established in 1989, and last year's revenue was W770 billion (US$617 million). About 360 people are working at the Korean office and Koenig was assigned CEO of Merck Korea last August.
Merck Stays Strong
"I'd like Koreans to remember two words when they hear the name Merck - Innovation and Tradition," said Koenig. Indeed with tradition and innovation, Merck stands strong in the crisis having no salary cuts or layoffs. "When we select an employee to work with, we think in terms of hiring them for the long term purpose. We are very careful in recruitment decisions because we try to find one who can work with us happily for a long time," said Koenig. Perhaps it is time we let go of the present worries and use this slowed down period to re-consolidate management values and philosophies. The great part of life is that it always allows us to start a new history as of this moment.