Samsung and Thai DVD...
Samsung Plans Thai DVD , Air Conditioner Plants
The Nation
08/31/98
Newsbytes News Network
(c) Copyright 1998 Post-Newsweek Business Information, Inc. All rights reserved.
BANGKOK, THAILAND, 1998 AUG 31 (NB). Thai Samsung Electronics Co. Ltd., a local subsidiary of Korea's Samsung Electronics [SK:64050], plans to open an assembly line for air-conditioners by the end of the year and is also considering setting up local production facilities for DVD players by the year 2000, according to Kang Soo Lee, the company's assistant managing director.
The parent company has decided to inject US$10 million of registered capital into its operations in the country by the end of 1998, a move aimed at refunding loans to banks and raising Samsung's holdings in its Thai subsidiary from 50 percent to 83 percent. The remaining 17 percent stake will be held by its local partner, Sahapathanapibul Group.
Thai Samsung Electronics currently has US$16 million in registered capital.
Lee said the local factory, situated in Sriracha province, currently produces 500,000 colour television sets year, 500,000 washing machines, 200,000 refrigerators and 50,000 video players. The company exports color television sets to Japan, Australia and Saudi Arabia, while its washing machines have been exported to countries all over the world. The company also increased its export ratio from 40 percent last year to more than 60 percent in 1998.
The company plans to open an assembly line for air-conditioners in Thailand by the end of this year, with domestic sales beginning in early 1999, Lee said. The primary capacity of air-conditioners will be 1,000 units a month, with initial investment of $1 million.
He said the company is conducting a feasibility study to determine whether it should set up local production facilities for DVD players. Sales in Thailand of imported DVD players will begin next month, with a retail price of 29,000 baht ($690). The company is being charged 30 percent import duty.
"It is possible that the company will open a production facility for DVD players if there is encouraging demand in the domestic market. Setting up local facilities will help Samsung to market DVD players at competitive prices," explained Lee.
He added that the company has set a primary sales target for DVD players in Thailand of between 100 units to 200 units a month, while the sales volume necessary for opening local production facilities is around 2,000 units per month.
Thai Samsung Electronics disclosed that its domestic volume sales in the first half of this year had dropped by between 20 percent to 30 percent compared to the same period last year, Lee said.
The sales plunge was caused by shrinking demand as well as the company's recent price increase of 15 percent. Lee said the company tried not to increase its prices, but its operations had been affected by the higher cost of imported materials brought on by the depreciation of the baht.
Exchange rate: $1 = 42.05baht
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