Samsung Group of china

1. Samsung Group

The Samsung Group (Korean: 삼성 그룹) is a multinational conglomerate corporation headquartered in Samsung Town, Seoul, South Korea. It is the world's largest conglomerate by revenue with an annual revenue of US $173.4 billion in 2008] and is South Korea's largest chaebol. The meaning of the Korean hanja word Samsung (三星) is \"tristar\" or \"three stars\".

The Samsung Group is composed of numerous international affiliated businesses, most of them united under the Samsung brand including Samsung Electronics, the world's largest electronics company, Samsung Heavy Industries, the world's second largest shipbuilder and Samsung C&T, a major global construction company and Samsung Life Insurance, the largest insurance company in Korea.

Samsung has been the world's most popular consumer electronics brand since 2005 and is the best known South Korean brand in the world. Samsung Group accounts for more than 20% of South Korea's total exports and is the leader in many domestic industries, such as the financial, chemical, retail and entertainment industries. The company's strong influence in South Korea is visible throughout the nation, which has been referred to as the \"Republic of Samsung\".

2. Samsung Group of china

Samsung in China may date back to the 70s, in China and the ROK established diplomatic relations Huan no historical background, Samsung Jing Hong Kong imports from China Coal, which is South Korean companies in the founding of New China and China's very first trade.

April 1992, Samsung established in Tianjin Samsung's first joint ventures in China. August 1992, after the establishment of diplomatic relations between China and ROK, Samsung in China began to accelerate. January 1995 to strengthen Samsung's business in China, Samsung Group, set up headquarters in China; the following year, Samsung (China) Investment Co., Ltd. was established.

After 10 years of development, now Samsung's more than 30 companies in the Samsung Electronics, Samsung SDI, Samsung Electro-Mechanics, Samsung Corning, Samsung Networks, Samsung Life, Samsung Fire, Samsung Securities, Samsung Corporation carried out in 18 enterprises in China investment, business electronics, finance, trade, heavy industry, construction, chemicals, clothing, wool textiles, advertising and other areas.

From 1993 to 1995: Tianjin (CTV, DVS, Electric, digital cameras, trade), Suzhou (semiconductors, household appliances), Weihai printer, set up heavy industry in Ningbo. Tianjin 1996 SDI, the Shenzhen SDI, corporate displays set up in Tianjin. Corning 1998,

Shenzhen, Shunde stars formed steel pump.

From 2001 to 2004 mobile phones were set up in Tianjin, Shenzhen, mobile phones, Suzhou LCD, Suzhou, notebooks, optical communications and other legal persons of Hainan. Samsung Fire Shanghai company in 2005, life partner companies have set up, started to engage in the financial sector.

Samsung 28 in the assembling production companies, 28 sales companies, four R & D institutions and a number of representative offices, offices, product technology services, has a staff of about five thousand people. As of the end of 2004, Samsung achieved total investment in China more than 4.0 billion dollars in 2004, when sales of 24.3 billion U.S. dollars, which in China was 16.2 billion in sales. Samsung China in 2004 the amount of exports from China reached 9.2 billion U.S. dollars, accounting for 57% of total sales and exports to the mainland of 1.6%. At present, Samsung China established more than 90 agencies, employing more than 5 the number of people, businesses involved in electronics, finance, trade, heavy industry, construction, chemicals, clothing, wool textiles, advertising and other areas.

Former president of Samsung China:

From January 1995 to January 1997, Senior Long Zheng From January 1997 to July 1998, president Lee Pil-kun From January 1999 to January 2002 Jinliu Chen President From January 2002 to February 2003 Hyung President February 2003-January 2005 President Lee Sang Hyun Since 2005 ---- Pugen Xi president

3. SWOT Analysis

A SWOT analysis will show the strengths, weaknesses, opportunities, and threats that SCH is looking at when they put together their potential marketing strategy into the China’s economy.

Strength:

- International Brand

- High technology in TV industry

- High quality while at lower price (Exhibit 7 in the case)

- SCH is committed to enhance its image to the Chinese market - Ability to conduct cost reduction through economies of scale

Weakness

- Weak Brand recognition in Chinese market

- Already lost its first mover advantage in Chinese high-end market - Stereotyped thinking of the Headquarter about China - Trouble between SCH and headquarter in Seoul

Opportunity

- High market potential, only 41% diffusion of household in China, especially just 28% in rural area

- Rapid expansion to the market

- Evaluation that the TV made by Samsung was high quality comparing with price - Positive image in China for establishment of SCH - Labor costs in China were less than in Korea - Supporting by the Korean government

Threat

- Intense competition in both high-end and low-end market - China was a highly protected market (protectionism)

- SCH were facing some problems, such as over-employment problem, difference between central plan and local plan, due to the government incomplete planning system - Many smugglings and piracies - Regional blockades

- Late entering in Chinese market because there was a tendency that first image of a product lasted long in the eyes of the consumer

- A premium-priced product wouldn’t sell in large volumes, so pricing can be a problem.

It must be understood that China is still primarily a centrally planned socialist economy. When viewing the socialist government economic plan and the actual fact, there is a huge gap between theory and actual feasibility. Local governments realize the scarcity of resources and opportunities and thus, they want to achieve their self-interest. Samsung must comprehend that the emphasis is placed on social profitability rather than economic profitability when doing business in China’s market. Capitalistic projects look for ROI as a driving force, however, the socialistic economy evaluated not on ROI, but on “social factors”, such as employment, the construction of new buildings, the training of workers, and the prestige of having a new facility located in a province or city.

Along the social profitability, it is important to realize that the over-employment problem will probably happen in every business or project in China. It is very uneconomical that the vast amount of workers has no productive function while the company has to list approximately 50% or more unneeded labor on payrolls than they need. Under China’s governmental policies, to change the situation within the company would be faced a political difficulty.

Competition in China is fierce. Sony and Matsushita had a combined market share of around 75% in the high-end market, while in low-end market, indigenous firms, with a total number of more than 20, focused on this segment. And some of them were even competitive enough to attack the medium-end market. Even the exist market for low-end consumers is large (28% of 220 million rural household); it was still impracticable to compete with the indigenous firms at even lower price. Moreover, Samsung’s comparative advantage, compared with those indigenous firms, lay on the technology. Its R&D strength is far more advanced than those Chinese TV manufacturers. Hence, Samsung should develop its own strength into a virtually competitive advantage.

Although premium-priced product wouldn’t sell in large volumes, profit margin for Samsung was still deemed to be large if Samsung succeeded in achieve economy of scales and experience curve.

Besides, establishing premium brand image could benefit in the long run. In China’s market place, first image of a product lasted long in the eyes of the consumer, thus, branding strategy could be

a determinant factor influencing the consistency of Samsung’s business strategy in the future.