| Samsung: No Relocation Will Take Place |
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| Friday, 18 May 2007 | |
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Samsung Electronics has denied news about the intended relocation of its major domestic production plant to Vietnam. On May 15, 2007, Samsung Electronics Co. refuted the reports of its intention to shift its major domestic production line of mobile handsets to Vietnam in order to reduce the production costs as the competition stiffens globally. Yonhap News published this. Samsung Electronics will move its major mobile phone production-base to Vietnam. Samsung’s cell-phone unit’s yearly sales output is approximately W17 trillion. The largest mobile maker of Korea has already discontinued the recruitment of new staff for its domestic plant in North Gyeongsang Province, Gumi. The region hires around 700-800 employees per year. This decision will deal a vital blow to local manufacturing industry, which is dwindling at present. Samsung Electronics – the high tech giant of South Korea – is planning to move its key mobile phone manufacturing unit to Vietnam owing to the rising labor costs in domestic market. However, the cost of labor in Vietnam is lower in comparison to Southeast Asia. “Vietnam is just one of the emerging markets we are thinking of as a new global production base," Chae Suyeon – the spokesperson - told AFP”, as per the news published on The Nation . In 2006, Samsung produced 130 million cell phones, about 62% (that is 80 million) of which were produced at Gumi plant. 35% of overall production (that is 45 million) was produced at the plant in China. Samsung, which follows Motorola and Nokia in worldwide handset market, recently showed recuperation in its cell phone business. The recovery was made possible by the company’s shift in focus towards medium and lower end models. Next year (2008), domestic production of Samsung should make up below 40%. The new plant in Vietnam, which will come in to operation from 2008, is expected to produce 100 million mobile phones – much more than that of Gumi. China is also likely to produce 100 million mobile sets next year. According to some industry experts, following in Samsung’s footsteps other tech savvy component firms will also set up their plants in Vietnam in the years to come. “With the decision, it’s clear that leading firms find the situation as dire in Korea. If these companies move their huge plants overseas, domestic industry’s hollowing will gain pace. This development will adversely affect the current unemployment problem in the country. Samsung needs to widen its presence abroad if it wants to enhance its position in emerging markets for low and medium priced mobile phones,” said a research analyst at RNCOS. Related Market Research Reports: |
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