[VIETNAM]Samsung keen to raise investment in fast-growing Vietnam market

Samsung Electronics Co. is increasing its presence in Vietnam, one of the world`s fastest growing economies. Its Vietnamese operation Samsung Vina Electronics Co., shortly called SAVINA, has achieved 15-30 percent annual growth rates for the past several years.

Vietnam is now responsible for 5 percent of Samsung Electronics Southeast Asia region sales, but the country`s portion is expected to become larger, according to Samsung Electronics Southeast Asia Pacific president Park Sang-jin.

Southeast Asian regional revenue hit $10 billion in 2006, up from $8.7 billion in 2005. Samsung aims to earn $11.7 billion from the region this year and $20 billion in 2010.

In case of LCD TVs, sales recorded 250,000 units in 2006, up six times from 40,000 units in 2005. Figures are not available as a single business unit in Vietnam but in larger Southeast Asia Pacific market, according to the company.

President Park said during an IR seminar held late last year in Singapore, "We`re trying to give a little bit of changes in our Southeast Asian market strategies, as the ASEAN Free Trade Area or AFTA pact is to take effect in 2008."

"As the first step, we positively consider building an IT plant in Hanoi, Vietnam."

Plan for IT plant

The newly envisioned plant in Vietnam will be optimized to mass produce PC monitors and printers, as Samsung`s current Ho Chi Minh City plant is rolling out TVs.

Park added that the company`s Southeast Asian businesses will be clearly divided into TV/white-color home electronics in Taiwan, audio/DVD players in Indonesia, TVs in Vietnam, LCD TVs/PC monitors in Malaysia.

Samsung has the lion`s share of the Vietnamese market in products such as flat-panel TVs, digital light processing or DLP TVs, side-by-side refrigerators, MP3 players, DVD players and mobile phones.

The company has sticked to its premium strategy in the market, as Vietnam, with 8.4 million population, shows high economic growth rates approaching 8 percent annually.

Demands are almost explosive in Vietnam`s most populated areas such as Hanoi, Ho Chi Minh City and Danang.

"No country can hardly catch up with Vietnam for the next 20 years, as the country excels in labor productivity. An average Vietnamese works 48 hours a week including Saturday, and there are only eight holidays in a year. About 54 percent of its workforce is under the age of 30, out of a total of 84 million population," said Yom Sang-youl, general manager at Samsung Vina Electronics.

Samsung recently slightly changed its marketing strategies to include low-end segments as well. It now sells mobile phones priced below $100 in the Vietnamese market.

The regional demand for their CDMA and GSM-compatible handsets is so overwhelming that there is a perennial supply shortage, officials said.

Samsung`s handsets are being supplied via S-Telecom, under the brand name "S-Fone," where Korea`s largest wireless carrier SK Telecom has a 86 percent share.

The country, now with about 20 percent wireless penetration rate, has a promising outlook, officials said.

Samsung`s liquid crystal display TVs are also enjoying growing popularity. The LCD TV lineup includes 26-, 27-, 32-, 37-, 40-, 46- and 52-inches with the brand names of Bordeaux, Mosel and Sonoma.

The Bordeaux TV series, whose shape resembles that of a wine glass, particularly sell well in the region as the Vietnamese puts more and more value on design, officials said.

The new TV lineup was completed with softer lines and transparent materials, enhancing their clean-cut design.

"We think Southeast Asia as key for the growth of our home electronics business. The market actually grows about 20 percent every year," said Hwang Jin-oh, an official at the company`s public relations team.

"We are riding on the Hallyu or Korean wave which draws many Vietnamese to Korean pop culture, which leads to an increased brand recognition," he said.

As its recent feat, the electronics maker won the "Vietnam Quality Award" in the manufacturing sector in November last year.

Quality award

The award, given by the Directorate for Standard Measurement & Quality under the Vietnamese ministry of science, honors enterprises` achievements in quality and performance, meaning the top-notch privilege and honor, Samsung said.

The annual Vietnam Quality Award, modeled after the Malcolm Baldrige National Quality Award of the United States, is given to businesses - manufacturing and service, small and large - that apply and are judged to be outstanding in seven areas such as management results, process management, management leadership and customer satisfaction.

About 500 domestic and overseas companies participated in the competition for the award this year.

The jury recognized Samsung`s efforts on the management process, ranging from manufacturing to service, which is systemized and can be rightly translated into concrete data, according to Samsung.

Further, as part of its social contribution activities, Samsung is helping Vietnamese children suffering from heart diseases and aftereffects of defoliant in the Vietnam War.

Samsung Vina Electronics, along with Samsung Medical Center, plans to fund $250,000 for children`s heart operations and medical equipment by 2007.