Samsung to Move PC Production to China
Samsung Electronics, the world's largest maker of memory
chips, plans to move most production of PCs to its new
Suzhou manufacturing plant, which started operations in
April. By 2005, it plans to make most of its PCs in the
Suzhou factory, which will have an annual capacity of
1 million units.
Samsung said that the move is necessary because of intense
pricing competition from Dell and Hewlett-Packard. Seventy-five
percent of the company's PCs are sold domestically in
the South Korean market, with a remaining 25 percent sold
outside.
The PC business accounts for 16 percent of the digital
media division's sales, which in turn accounts for about
one-fifth of the group's total sales. Approximately 60
percent of Samsung's home appliances and more than two-thirds
of its digital media products are already produced outside
of South Korea.
In recent years, South Korean companies have suffered
from tense relations with their South Korean workers.
In some cases, relations have been marred by strikes and
other kinds of industrial action.
In China, a worker costs about one-tenth of what a South
Korean worker does, and the quality of their productivity
is very high. This has accelerated the transfer of plants
to China.
A survey conducted by the Korea Federation of Small Businesses
showed that 7.2 percent of its 375 member companies have
moved their operations abroad, and that another 30.7 percent
plan to do so, mostly to China, in the next five years.
Other Korean companies which have moved their operations
to China are LG Electronics, which is building a plasma
display panel (PDP) module plant in Nanjing, and Hyundai
Heavy Industries, the world's largest shipbuilder, which
has an excavator plant in China.
Before you go, did you like this article?
If so, you can receive a free email newsletter version
each weekday. Sign up using the China Business Express
form on this page.
