The Korea Herald: Samsung expands smart business in Vietnam, China
Samsung Electronics, already a leading business force in most emerging nations, is determined to solidify its footing in Vietnam and China, widely regarded as two of the most significant and influential overseas markets for both Korea and the world.
The company has previously invested extensively in the regions, but is expected to further expand, armed with bigger investments and incentives for both markets.
Reflecting the urgency of the issue, Samsung Electronics chairman Lee Kun-hee earlier this month toured the two countries, starting with a trip to Vietnam ― one of the world’s best known and most lucrative emerging markets ― and China, without a doubt the market with the highest growth potential.
Lee was accompanied by key executives including his son Lee Jay-yong, Samsung Electronics president, triggering speculation that the trip was a significant one for both Samsung and the two nations.
Samsung currently operates a plant in Yen Phong, which also is to receive more investment for expansion, with the total amount expected to reach $1.5 billion by 2020.
Samsung Electronics chairman Lee Kun-hee and his wife Hong Ra-hee receive a commemorative plaque from workers during their visit to a Vietnamese factory on Oct. 13. (Samsung Electronics)
In total, Samsung will be investing up to $2.2 billion in the two handset facilities, company sources said.
Vietnam, to respond to Samsung’s latest investment decisions, has been quickly easing regulations and offering incentives for the new locale.
During a meeting with Vietnamese Deputy Prime Minister Hoang Trung Hai, Lee reportedly said that he had plans for further investment in the country, citing Vietnam as “dynamic and full of potential.”
The plans indicate that Samsung Electronics, which has quickly risen to become a global leader in smart devices, particularly smartphones, sees its future in the business as promising.
“The aggressive investment plans show that the company expects far more business in future years, and it wants to be prepared,” said one industry source.
The company’s Vietnamese office opened in 2009 and is currently producing 150 million handsets a year, which is the largest volume among Samsung’s eight mobile phone plants. More than half of these handsets are smartphones.
Samsung’s mobile business unit is boosted by brisk sales of smartphones, displays and tablet PCs. During the third quarter of this year, the unit recorded nearly 30 trillion won ($27.4 billion) in sales and 5.63 trillion won in operating profit.
Overall, Samsung’s quarterly earnings were a pleasantly lucrative package for investors, as sales broke a record surpassing the 8-trillion-won mark.
The company’s quarterly handset sales also passed the 100 million mark for the first time.
Even the patent war with U.S. electronics giant Apple Inc. appears to be not all bad news: While Samsung is still caught in the fray, some courts have already ruled that Samsung had not copied Apple’s designs.
Along with Vietnam, China is another crucial market for Samsung.
There are currently some 156 offices in China being operated by 22 Samsung affiliates.
Sales from the China region rose by an average 23 percent each year since 2008 to reach $58 billion in 2011, up from the $30.8 billion logged in 2008.
Immediately after Samsung announced its third-quarter earnings, Shin Jong-kyun, head of Samsung Electronics’ mobile unit, embarked on a two-day tour of Samsung offices in China, a move many interpreted to be a reflection of Samsung’s perception of China as one of its most critical markets as it came in the same month that Samsung Chairman Lee Kun-hee paid his visit.
Shin told reporters that he met with Samsung’s Chinese corporation and the employees.
As of 2011, the Chinese mobile phone market grew to be around 255.1 million handsets. This makes it the largest communications market following the United States.
Samsung’s mobile phones account for more than 17 percent of this significant market, closely following Nokia even while third- and fourth-tier companies ― mostly China’s homegrown ― are hot on Samsung’s heels.
As a sign of Samsung’s growing commitment, the company recently installed catchy ads at more than 170 bus stops in China’s capital Beijing. More ads are in store to advertise the Korean heavyweight’s latest lineup of smartphones, laptops and smart TVs, company officials said.