Securing Price Competitiveness
Samsung Electronics is building a mobile phone manufacturing plant in Indonesia in a bid to improve its price competitiveness by expanding overseas production and better penetrate emerging mobile markets, which are considered to hold the key to breaking the stagnation of the growth of the global smartphone industry. The company is currently running handset manufacturing facilities in Korea, China, Vietnam, Brazil and India.
“These days, Chinese manufacturers are emerging rapidly with their low-cost products, and the recent decision of Samsung is to compete more effectively with them,” said Lee Seung-hyuk, researcher at Korea Investment & Securities.
Samsung Electronics is gradually increasing its overseas mobile phone production volume. It is in this vein that it is building its second plant in Vietnam in Thai Nguyen Province, to increase the annual manufacturing capacity in the country to 240 million units by 2015. Assembly line extension is underway in Noida, India at an investment of 100 billion won (US$98.2 million), too. It is also producing 110 million handsets a year in China, 60 million in India, 50 million in Brazil, and 40 million in Korea.
Indonesia itself is a mega market with a total population of over 250 million. The market is expected to keep growing at a fast pace along with those in the Philippines, China, India, Vietnam, and the like. By region, the number of smartphone users is the highest in the Asia Pacific. According to market research firm Strategy Analytics, the Indian mobile phone market reached 10 million units in size in the first quarter of this year to become second only to China and the United States. It was followed by Vietnam, Indonesia and the Philippines.
In the meantime, global leading smartphone manufacturers are moving their facilities abroad one after another for the sake of profitability. Nokia shut down its plant in Salo, the last one in Finland, and began construction in Southeast Asia for cost reduction. Apple manufactures 100 percent of its iPhones and iPads in China in spite of the pressure from the U.S. government.