Where will Samsung go after leaving China India or Vietnam?

04-Jan-2019 Intellasia | Vietnamnet | 6:00 AM Print This Post

After December 31, 2018, Samsung’s hand-held devices will no longer be produced in Tianjin, China, where its second largest factory operates.

The production of at least 36 million phones there each year would shift to either Samsung’s factory in Huizhou, in Guangdong, China, or to a third country.

Samsung reports that its mobile phone sales in China decreased from 20 percent to 1 percent in the last five years. The 19 percent market share has been talked by Huawei and Xiaomi. The figure is extremely high for a market with more than one billion people.

In 2013, when Samsung acquired 20 percent of smartphone market share in China, the factory in Tianjin earned 15 trillion won, or $13.3 billion each year. However, the figure halved in 2014 and now is to one percent.

In such circumstances, Vietnam and India have been named as the candidates for ‘the third country’. Both countries have a big labour force and have high numbers of consumers who like Samsung products.

A survey conducted by GfK showed that Samsung was leading Vietnam’s mobile phone market by the end of the third quarter 2018, holding 41.4 percent of market share.

In early November, Thelec, South Korea’s website about electronics industry, on the occasion of Samsung leaders’ visit to Vietnam, reported that Samsung may build its third smartphone factory in Vietnam when it stops production in China.

The website commented that the government of Vietnam may offer investment incentives to encourage Samsung to build the third factory, expected to have the capacity of 60-120 million products per annum.

The factory would focus on manufacturing low-cost and medium-tier products to be provided to Southeast Asia, South Korea and India.

Commenting about the competition between Vietnam and India in attracting Samsung, Nguyen Mai, chair of the Foreign Invested Enterprises’ Association (VAFIEs) said Vietnam has more advantages than India.

According to IDC, a market survey firm, the Indian smartphone market grew by 14 percent in 2017 with 124 million products churned out in the year. India has surpassed the US to become the second largest smartphone market in the world, after China.

Samsung once led the Indian market, but not now. The market has seen the strong rise of manufacturers from China in the last few years.

Samsung’s Q2 revenue was 14.8 trillion won, or $13.2 billion, lower than the predicted revenue of 15.3 trillion won. In Q1, the revenue fell by 2 percent.

IDC’s analyst Jaipal Singh believes that opening a factory in India will be the right move for Samsung.

“In such circumstances, Vietnam and India have been named as the candidates for ‘the third country’. Both countries have a big labour force and have high numbers of consumers who like Samsung products.”

https://english.vietnamnet.vn/fms/business/215141/where-will-samsung-go-after-leaving-china—india-or-vietnam-.html

 


Category: Business, Vietnam

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