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Samsung Vice Chairman Meets Prime Minister of India to Discuss Business Cooperation
India Replacing China as World's Factory
Samsung Vice Chairman Meets Prime Minister of India to Discuss Business Cooperation
  • By Michael Herh
  • July 10, 2018, 10:53
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Lee Jae-yong (left), vice chairman of Samsung Electronics, President Moon Jae-in (second from right) and Prime Minister Narendra Modi (right) are cutting the tape at a ceremony for the opening of a new factory in Noida, Uttar Pradesh in northern India on July 9 (local time).
Lee Jae-yong (left), vice chairman of Samsung Electronics, President Moon Jae-in (second from right) and Prime Minister Narendra Modi (right) cut the tape at a ceremony for the opening of a new factory in Noida, Uttar Pradesh in northern India on July 9 (local time).

Lee Jae-yong, vice chairman of Samsung Electronics, attended a ceremony for the opening of a new factory in Noida, Uttar Pradesh in northern India on July 9 (local time). During the ceremony, Lee met key local political and business leaders including Prime Minister Narendra Modi and discussed ways for business cooperation. The opening ceremony was attended by President Moon Jae-in, which showed the importance of the new factory.

Local media outlets including IANS and India's largest English-language daily The Times of India paid much attention to the ceremony by devoting a great deal of space or time to the presence of President Moon and Prime Minister Modi at the event.

Samsung Electronics completed the factory by investing about 800 billion won. The company began to build the factory in June 2017 to expand its mobile phone production capacity. The completion of the factory ramped up the size of the Noida factory from 120,000 square meters to 240,000 square meters. The factory’s monthly production of mobile phones will increase from five million units to 10 million units and its monthly refrigerator production from 100,000 units to 200,000 units.

Experts say that Lee's decision to expand the plant shows his will not to miss out on opportunities in the Indian market, which is expected to grow not only in the smartphone sector but in various areas. Last year, Samsung Electronics’s Indian subsidiary continued to grow rapidly, posting 10.339 trillion won in sales, up 17.8% from the previous year. But the subsidiary showed a temporary slowdown in the first quarter of 2018, showing a 5.5% decrease in sales from the same period of last year.

It seems that the subsidiary struggled in a price war with Chinese companies. According to market researcher Counterpoint Research, Xiaomi, which recorded a market share of only 13% in the first quarter of 2017, jumped to 25% and ranked first by beating Samsung Electronics which recorded a 23% market share in the fourth quarter in the same year. In the first quarter of this year, by recording a 31% market share, Xiamoi widened the gap with Samsung Electronics, which increased its share to 26%.

Under these circumstances, Samsung Electronics is employing a strategy to bolster its mid- to low-priced lineups such as the Galaxy J series along with the operation of the Noida new factory, actively coping with China's offensive and maintaining a comparative advantage in the premium phone market. Koh Dong-jin, head of the IM (IT & Mobile) Division at Samsung Electronics, showed strong confidence, saying that Samsung lost the top position of the Indian smartphone market temporarily.

Samsung is spurring the expansion of its business not only in the Indian smartphone market but in the Indian TV market. According to local news reports, Samsung Electronics recently laid out a plan to raise its market share in the Indian UHD TV market from 36% to 45%. Samsung Electronics is making various efforts to enhance its corporate image in India. It has recently been selected as the Most Trusted Brand in “The Brand Trust Report 2018” announced by TRA Research, a leading Indian market research company.

Samsung Electronics established a subsidiary in India in August 1995, followed by the Noida factory in 1996, which produces mobile phones and refrigerators. In 2007, Samsung Electronics also built a TV and home appliance factory in Chennai.

Experts in the Korean business world say that there is a big possibility that India will expand strategic partnership with Korean companies a great deal as Prime Minister Modi is nurturing the manufacturing industry in which Korean companies have strengths. In particular, they say that it is highly likely that India will cooperate with Samsung Electronics in such areas as semiconductors which are Samsung's flagship business, and electric devices for autonomous vehicles, a new business of Samsung. According to the Federation of Korean Industries, India, which recorded 7.7% economic growth in the first quarter of this year, is expected to continue a high growth rate of 7%.