Samsung Acquires GSM Trade Rights in China
By Yu Sung-ho
Saturday, January 11, 2003
Samsung Electronics secures trade rights to GSM handsets in China, as the second foreign company following Motorola, stretching the global mobile phone industry's nerves keyed up. The Chinese government had limited trade lights to mobile phones to local companies to protect its domestic market but exceptionally gave the rights to Motorola that placed its second head office and made intensive investment in the country.
Many experts consider that it is very unusual for the Chinese government to grant the rights to Samsung. It is analyzed that it is largely due to Samsung’s massive investment in the country and the Chinese government’s consideration.
"We secured trade rights to GSM handsets late last year," said one high-ranking official of Samsung Electronics on Jan. 12. "With the trade rights, we will be able to sell handsets produced in local factories in the huge market, and consequently, our market competitiveness will be greatly strengthened."
Samsung's local corporation in Tianjin has reportedly started making preparations to advance into the local market, looking for a sales agent.
Since late last year, it has been rumored that Samsung Electronics acquired the rights from the Chinese government. But Samsung has kept denying the rumor. And this is the first time that the company acknowledged the rumor.
When the trade rights becomes effective, Samsung can sell locally manufactured GSM handsets in China, securing an absolute advantage over its rivals, including Nokia, who should bring in products from overseas.
So far, Samsung has supplied products produced in Korea to China and been at a disadvantage, compared with Motorola, due to huge logistics cost.
In particular, its local factory in Tianjin is no longer obliged to export the whole quantity of manufactured products. Accordingly, Samsung has come to enjoy a greatly increased investment effect as well.
Furthermore, with the trade rights, Samsung is expected to make huge investment in China, and the Chinese government to give much care to the company. If that expectation is realized, Samsung’s status in the largest market of the world is likely to be greatly enhanced, giving a great impetus to its global strategy.
Samsung Group has made a blueprint for taking China as the second head office for a few years and is making an investment in the country under a long-term plan.
etienglish.com
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