Samsung To Set Up Handset Plant In Bangladesh

South Korea's Samsung Electronics may establish a handset manufacturing facility in Bangladesh as part of its plans to broaden its presence in the Indian sub-continent and take advantage of growing demand for affordable low-end smartphones and enhanced featurephones. Samsung has recently become the world's largest supplier of handsets, overtaking an other emerging markets staple brand, Nokia , and appears ready to capitalise on its increased visibility to consumers. BMI also believes this move reflects a sharper business focus being employed by the company that better aligns with widely differing consumer spending and macroeconomic conditions within its global footprint.

Under the tentative plan, broached by South Korean ambassador Lee Yun-young in a meeting with Bangladesh ' s minister of industries , Samsung would build a smartphone assembly plant and develop a distribution and sales business that could employ up to 50,000 Bangladeshis and generate US$1bn worth of exports for the country. Industries minister Dilip Baruda is quoted by United News of Bangladesh as remarking that foreign companies would be encouraged to utilise the country's internal market advantage and cheap labour resources. BMI would expect Samsung to be offered additional incentives to build a large manufacturing plant in the country, including tax breaks.

King Of The Smartphone World
Samsung Shipments Vs Total Industry ('000 units)

BMI ' s mobile operator database tracks new mobile subscription rates worldwide as well as reported sales of handsets by manufacturer s . Our data show that, in Q312, Samsung shipped approximately 101.7mn handsets worldwide. This represented 23.3% of total industry shipments of 436.1mn and was a q uarter -o n -q uarter increase of 8.0% from 94.1mn handsets in Q212. The company is only 3.4% ahead of Nokia in terms of market share and is clearly looking to unseat the Finnish vendor in its core emerging markets stronghold while it is distracted by the launch of new make-or-break smartphones in mature markets .

BMI believes that, by setting up manufacturing facilities in Bangladesh, Samsung will secure access to a la rge unskilled but trainable workforce with low wage expectations, easily rivalling similar markets being exploited in neighbouring India and China. It will also gain access to more direct distribution channels in some of the world's largest and fastest-growing markets for smartphones, further lowering costs and helping its products become even more affordable.

However, there are a number of potential downside risks that could offset this otherwise positive outlook. Firstly, Samsung will be going head to head with a large number of ultra low-cost local manufacturers in Bangladesh, India, I ndonesia and China. Although Samsung's strong smartphone sales globally may be attributed to the devices' stylish design, cost considerations are more important in emerging markets, and Samsung may still fail to win customers faced with a large array of very cheap featurephones produced by the likes of Lenovo, ZTE, Konka, Bling Mobile and Spice Mobile , among others. Furthermore, these locally developed devices offer features that are not standard elsewhere in the world, but which appeal to budget-conscious consumers, such as the ability to hold multiple SIM cards simultaneously.

This article is tagged to:
Sector: Consumer Electronics
Geography: Bangladesh, Bangladesh, China, Indonesia, India, South Korea, Bangladesh, Bangladesh

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