Samsung’s investments upheld amid profit drop

“There is no change in our investment plan,” Han Myoung Sup, executive vice president of Samsung Electronics and also the newly-appointed president of global strategy & operations in Vietnam, told VIR last week when asked about the impact of the fall in profits. “Regarding the profit drop, we’ll try to fix it. Actually, we’ve been trying to resolve the issue,” he said.

Samsung Electronics recently announced that the firm estimated its operating profit for the fourth quarter of 2014 would reach $4.7 billion, a drop of about 37 per cent from a year ago, as the company grapples with increased competition in its core smartphone business.

Samsung also estimated that its sales for the quarter were likely to have fallen about 12 per cent on-year, to $47 billion.

This estimate means that the company expects to report its fifth consecutive quarter of declining operating profits after a string of five quarters of record profits.

Amid the increasing competition of rivals such as Xiaomi, Huawei, Apple, Sony, and Microsoft, Han said he believed the Vietnam manufacturing base would play a pivotal role in the South Korean electronics firm’s efforts to enhance competitiveness.

At present, Samsung has two operating manufacturing complexes in Thai Nguyen and Bac Ninh. Last year, it manufactured around 150 million electronic products in Vietnam, generating around $28 billion in export revenue.

The appointment of Han, one of Samsung Electronics’ top executives, to Vietnam indicates how confident the firm is about its activities in Vietnam.

Just a few months ago, Samsung received an investment certificate to build a new $3 billion factory in Thai Nguyen province which will be a part of its plan for manufacturing full-metal body smartphones.

Since starting its first mobile phone factory in Bac Ninh province in 2007, Samsung Electronics has gradually expanded its investment in Vietnam. According to statistics from the Ministry of Planning and Investment (MPI), Samsung Electronics committed to invest $12.6 billion across Bac Ninh, Thai Nguyen, and Ho Chi Minh City.

If all the under-negotiation projects in Vietnam are successfully developed, Samsung’s total investment in the country will reach $20 billion, according to the MPI.