Seoul-based Samsung Electronics inaugurated a new factory in India, which the South Korean tech giant claims is the world’s biggest mobile phone manufacturing plant.
Built next to Samsung's original factory in Noida, on the outskirts of New Delhi, the new facility was formally opened on Monday by Indian Prime Minister Narendra Modi and South Korean President Moon Jae-in.
“This 50 billion-rupee investment will not only strengthen Samsung’s business ties in India, it will also play a key role in India-Korea relations,” Modi said in a speech at the inauguration of the plant.
Samsung announced the expansion of its Noida plant a year ago as part of a 49.2 billion rupees ($716.57 million) investment in India. The new factory spread over 129,000 sq. metres, will help Samsung to double its current capacity for mobile phones in Noida to an annual 120 million units in a phase-wise expansion that will be completed by 2020.
Samsung entered India in 1995, set up Noida factory in 1996 and has been manufacturing mobile phones in the South Asian country since 2007. Smartphones were added in 2012. The company has given employment to 70,000 people in the country.
According to a news report in Reuters, analysts tracking the sector said the new plant in Noida will allow Samsung to make phones at a lower cost due to its scale at a time when other phone making hubs such as China are getting more expensive,
Make in India for the World
Samsung also launched its ‘Make for the World’ initiative, planning to export mobile handsets made in India, to overseas markets.
“Our Noida factory, the world’s largest mobile factory, is a symbol of Samsung’s strong commitment to India, and a shining example of the success of the Government’s ‘Make in India’ programme. Samsung is a long-term partner of India. We ‘Make in India’, ‘Make for India’ and now, we will ‘Make for the World’. H C Hong, Chief Executive Officer at Samsung India said in the statement.
Modi’s flagship "Make in India" campaign was launched in September 2014 as part of a wider set of nation-building initiatives with the primary goal of attracting investments from across the world and strengthen India’s manufacturing sector.
“I want to tell the people of the whole world: Come, make in India. Come and manufacture in India. Go and sell in any country of the world, but manufacture here. We have skill, talent, discipline and the desire to do something.” Modi had said while introducing the programme.
The Made in India initiative has imposed taxes on imported products in categories including communications devices. Samsung, which currently ranks as the number two smartphone maker in the country, behind Xiaomi -the Chinese rival that just went public in Hong Kong-will be less affected.
India, a massive smartphone market
Asia’s third-largest economy represents a huge market of opportunity. Last year, the country attracted record foreign direct investment that stood at $62 billion, including reinvestment.
India, is the world’s second biggest smartphone market after China, with over 400 million users but the country’s population of 1.3 billion means that there’s still a lot of untapped potential. A study by Cisco Systems found that there will be 780 million connected smartphones in 2021, compared with 359 million in 2016.
Chinese smartphone makers from Xiaomi to Oppo Mobiles are building up their presence in India where low-end smartphones priced at $250 or less, have appeal to price-conscious consumers according to Bloomberg Intelligence.
Xiaomi now has a total of six factories that it says can produce two smartphones every second.
Besides Noida, Samsung has another production facility in Sriperumbudur in Southern India along with five R&D centers and one design center also situated in Noida. These are supported by a strong network of over 1.5 lakh retail outlets and 3,000 customer service points, the largest by any company in the country.
In October, 2016, Samsung launched 535 service vans to provide timely and quality customer service to consumers across the country, touching every remote village in all 6,000 talukas( administrative divisions of India denoting a sub-district).
Samsung from a trading company to a multinational conglomerate
Samsung, the largest South Korean conglomerate was founded by Lee Byung-chul in 1938 as a trading company. Over the next three decades, the group diversified into areas including food processing, textiles, insurance, securities and retail. In the 1960’s the Samsung Group entered the electronics industry and in the mid-1970s the construction and shipbuilding industries.
Following Lee's death in 1987, Samsung did not lose his philosophy of large-scale expansion and development. In 2012 Samsung Electronics became the world’s largest mobile phone-maker by unit sales, overtaking Nokia, the market leader. In 2015, Samsung had more US patents approved than any other company, being granted over 7,500 utility patents. In 2017, Samsung had the 6th highest global brand value.
Smartphone makers are expectedly betting big as India currently accounts for 10 per cent of global smartphone sales. India’s smartphone market grew 14 percent with total shipments of 124 million units in 2017, the fastest pace of growth among the top 20 markets, according to International Data Corp.