Global Strategy Testbed

Samsung Electronics’ smartphone plant in Vietnam.
Samsung Electronics’ smartphone plant in Vietnam.

 

Samsung Heavy Industries recently sent its staff to Vietnam in preparation for the construction of a new shipyard.

The company is planning to build a dockyard in the Khanh Hoa Province, where Oshima Shipbuilding returned its construction license. The total investment is estimated at US$500 million, and merchant vessels are expected to be built there.

Including Samsung Heavy Industries, the number of Samsung Group subsidiaries doing business in Vietnam has reached nine. The others are Samsung Electronics, Samsung Display, Samsung Electro-Mechanics, Samsung SDI, Samsung SDS, Samsung Life Insurance, Samsung Fire Insurance, and Cheil Worldwide. Their combined regional investment amounts to US$9.1 billion.

The penetration of the Vietnamese market is part of the Samsung Group’s strategy. The group is currently proceeding with a global business strategy based on a strategic alliance with countries having high growth potential, and the mobilization of enterprise resources for new business opportunities.

Vietnam is the largest mobile phone manufacturing base for Samsung. In March, Samsung Electronics invested US$2 billion in the Yen Binh Industrial Zone located in the Thai Nguyen Province to set up its second mobile phone manufacturing plant, with an annual production capacity of 120 million units. It is also planning to build 700,000 m2 electronics manufacturing facilities in Ho Chi Minh at an investment of US$1 billion by 2017.

Samsung Display is going to establish a mobile phone module factory in the Bac Ninh Province by 2020 by investing US$1 billion, too. Samsung Electro-Mechanics is working on handset production facilities in the same region at an investment of US$1.2 billion as well.

Samsung C&T, in the meantime, sets up the Vung Ang 3 Thermoelectric Power Plant with a capacity of 1,200 MW in the Ha Tinh Province. The total investment is approximately US$2.4 billion. The groundbreaking is scheduled for 2016 and additional plants of similar size may be built depending on market situations.

The Samsung Group’s expansion of investment in Vietnam is attributable to the relatively lower wage level and the ease with which highly-educated and skilled manpower can be procured. The ratio of the working age population is predicted to increase from 70.0 percent to 70.8 percent between 2010 and 2015 there. The labor cost is one-fourth compared to China.

The attractiveness of the Vietnamese consumption market is on the rise, too. The ratio of young population aged between 15 and 24 is 20.1 percent, higher than in other emerging countries such as India (19.0 percent) and China (17.8 percent). 

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