Investment
Samsung SDS increases its investment in Vietnam
Samsung SDS will co-operate with the country`s largest airport terminal logistics business Aviation Logistics Service (ALS) to establish a joint venture in Vietnam and boost its presence in the Southeast Asian logistics market.
The information has been published on Samsung SDS’s website recently. "Considering ALS's local network and diverse business capabilities, we decided that Vietnam is the optimal partner for Samsung SDS. Through this agreement we will continue to expand our business in Southeast Asia," said Kim Hyung-tae, executive vice president of Samsung SDS's Smart Logistics Business Unit.
According to Hyung-tae, there are numerous reasons for choosing Vietnam to establish a joint venture. The first is the rapid growth of the local logistics market, reaching between 15 and 20 per cent annual growth. The second is that a large number of foreign investors are relocating their manufacturing facilities to Vietnam thanks to the recent change of international trade environment brought about by the Trans-Pacific Partnership Agreement as well as the ASEAN Economic Community.
In addition, mobile phones and components became Vietnam's largest export item since 2013, which also influenced Samsung SDS to make this strategic decision, he said.
Samsung SDS is currently handling about 40 per cent of the operations at Noi Bai international airport in Hanoi, the largest airport in northern Vietnam, while ALS is the leading air freight terminal operator in the country, responsible for almost all operations. ALS is also the first and only company in Vietnam providing off-airport cargo terminal system, a model that has contributed a great deal to ALS’ success in Vietnam. Thus, Samsung SDS said it will seek new customers in Vietnam by providing integrated logistics services and expanding local sales channels on the back of ALS' existing customer base.
Samsung SDS plans to provide an integrated logistics service, including global and inland transportation, warehousing services, and customs brokerage, while utilising ALS’s customer network along with attracting potential customers by strengthening its external sales force through this partnership. Alongside the co-operation with ALS, Samsung SDS is negotiating partnership opportunities in China and will continue its efforts to provide advanced logistics services to customers outside Samsung group.
Samsung SDS provides its global logistics services through an integrated logistics solution labelled ‘‘CelloSCLISTM’’ which covers the whole range of logistics business, from supply chain management to logistics execution. Additionally, Samsung SDS launched a logistics platform called ‘‘Cello Square’’ in August 2015.
The joint venture will strengthen Samsung’s presence in Vietnam. The Korean giant currently has three major manufacturing complexes in the country, including Samsung Vina Electronics in Ho Chi Minh City and the $2.5-billion Samsung Vietnam Electronics complex in the northern province of Bac Ninh, which became operational in 2009. The remaining one is the $5-billion Samsung Vietnam Electronics Thai Nguyen complex, which went on stream in March 2014.
Besides, in March, Samsung SDI Vietnam Co., Ltd. (SDIV) was licensed to add $117.6 million to its existing mobile phone battery production factory in Que Vo Industrial Park in Bac Ninh. In addition, on March 30, the Hanoi People’s Committee granted the investment certificate for Samsung Electronics Vietnam’s $300 million research and development (R&D) centre to be built in Hanoi’s Hoang Mai District.
The number of Vietnamese firms joining the production chain of Samsung has increased sharply in recent years. Currently, 11 local businesses are Samsung’s direct suppliers or vendors level 1 and 52 others are of level 2. On May 19, Samsung Vietnam made a survey of Ngoc Khanh Wire and Cable Company and Goldsun Packaging & Printing JSC to assess their supply capacity.
It is part of a Samsung program to help Vietnamese businesses improve their supply capacity. Accordingly, Samsung’s technical consultants have come and stayed in Vietnam in 3 months to help the two companies improve their production process and complete supply standards and procedures. Up to now, Samsung has been the biggest foreign investor in Vietnam with two plants in Bac Ninh (Samsung Electronics Vietnam) and Thai Nguyen (Samsung Electronics Vietnam Thai Nguyen), which supply 33% of its total mobile phones globally.
