Samsung to build TV plant in S. Africa

Beleaguered by the challenges posed by its Chinese rivals coupled with worsening profits, Samsung Electronics is making efforts to cut costs by expanding its overseas production lines.

According to recent news reports, Samsung Electronics is planning to make a $375 million investment in the Dube TradePort special economic zone, located near the city of Durban, South Africa, to construct a TV plant.

“We have worked with Samsung and they identified the Dube TradePort as a space to operate from,” trade and industry director-general Lionel October said in an interview with Bloomberg.

South Africa is slated to launch the special economic zone, in which foreign companies will be able to receive benefits such as tax reductions, within a month or so and the Korean tech giant will be one of those anchor investors. 

As the TV business in other global markets including the U.S. and Europe has been sluggish, Samsung has been recently beefing up operations in emerging markets including South America and Africa.

Yoon Boo-keun, chief executive of the firm’s consumer electronics business unit, reportedly visited African nations including Nigeria, Zambia and South Africa earlier this month.

His visits are said to be aimed at overseeing the businesses in the regions and beefing up ties with local partners.

The sales of flat-panel TVs in the Middle East and South Africa increased from 14 million units in 2012 to 16 million in 2013, and the market is further expected to grow this year, according to international research institute Display Search

Other electronics affiliates of Samsung Group have been seeking opportunities in overseas markets to secure cost competitiveness.

Samsung Display has recently received approval from the Vietnamese government to build a $1 billion plant to produce display modules for smartphones.

The display manufacturer will start rolling out the modules in 2015.

“Faced with mounting challenges posed by Chinese smartphone makers including Huawei, Lenovo and Xiaomi, Samsung seems focused on reducing cost,” a market watcher said.

The Korean tech giant posted 7.2 trillion won in operating profit during the April-June period, its lowest in two years, according to the firm’s regulatory filing reported earlier this month.

The firm is slated to announce its second-quarter earnings on July 31.

By Kim Young-won (wone0102@heraldcorp.com)