Streamlining
More than 10 percent of Samsung Electronics’ production, sales and research and development bases across the world were closed down in the past year.
According to Samsung Electronics on March 3, the number of its global bases decreased from 213 at the end of 2014 to 187 in 2015 as its global subsidiaries and offices were merged. Twenty-six, or 12.2 percent, of them were shut down in a year. Including regional holding companies, which were merged from 15 into 14, six production subsidiaries, one sales subsidiary and nine R&D centers were closed.
Samsung Electronics’ annual sales went down from 228.69 trillion won (US$188.14 billion) in 2013 to 200.65 trillion won (US$165.08 billion) last year. During the same period, its operating profits also dropped from 36.8 trillion won (US$30.28 billion) to 26.41 trillion won (US$21.73 billion). This was because the market share and profitability of Samsung Electronics’ smartphones fell and its global demand slowed down. This year, the company is also seeing a downturn in component business, including semiconductors, so it can fail to achieve 200 trillion won (US$164.54 billion) of annual sales.
Samsung Electronics is currently discovering and promoting its new growth engine after smartphones, and is carrying out a reshuffle and downsizing, which rapidly grew in early 2010s. As part of the plan, the company is hiring more local residents and merging overlapped global branches and offices. The company closing a large electronics product trial store in London at the end of 2014 is a classic example.
However, the total number of Samsung Electronics’ employees is increasing as the company has hired more production employees in regions, which have cheap labor. The figure exceeded 300,000 in 2014 for the first time and it reached to 325,700 at the end of last year, up 7,000 in a year. In Southeast Asia, which has become the production base of Samsung Electronics’ smartphones and home appliances, the number of its employees had doubled from 57,000 in 2012 to 112,000 in 2014, and the figure reached 120,000 last year. About 70 percent of Samsung Electronics’ executives are foreigners now.