‘We Expect To Cross $10 Billion In Sales Revenue This Year’
All these will talk to each other and make lives easier,” says Hong, in an exclusive interview to BW Businessworld
Photo Credit : Ritesh Sharma
For South Korean consumer electronics behemoth Samsung, India is an important market globally. In 2017, the company announced fresh investments of Rs 4,915 crore to double the capacity of its plant in Noida. “Our R&D centres in India have been consistently bringing out innovations that are based on strong consumer insights under our ‘Make for India’ initiative,” says Hyun Chil Hong, President and CEO, Samsung SouthWest Asia. “Many of these products have done well in global markets, making them good examples of local solutions going global,” he adds. Having been in the country for over two decades, Samsung is currently preparing itself for the next big leap. “Samsung will drive the big Internet of Things revolution in India over the next few years. This will be a game changer. We have the technology. We have the devices – across categories, from home appliances to mobiles to wearables. All these will talk to each other and make lives easier,” says Hong, in an exclusive interview to Paramita Chatterjee.
Samsung entered India at a time when not much was known about Korean companies. Today, the company has completed over 20 years to become a household name. How would you describe your journey so far?
Our journey in India has been quite remarkable. From a new entrant in a just liberalised economy two decades ago, to becoming India’s biggest maker of mobile phones and televisions, our journey has been both fascinating and rewarding. Today we have two manufacturing plants, five R&D centres, 1.5 lakh stores and 70,000 employees. Coming to India in 1995 was a strategic decision considering the country was at the cusp of rapid economic growth and Samsung saw itself playing a big role in that. In the mid-1990s, there was a big appetite for contemporary products with world-class technology. There was also a need for consumer-friendly products and services. That has been our core since the beginning — listening to consumers and fulfilling their needs through cutting-edge technology and meaningful innovations.
When we started in 1996, we not only set up a manufacturing plant in India (in Noida), but we also set up our first R&D centre in Bengaluru. This shows how serious we have been about serving consumers in India right from Day 1. We expect to cross $10 billion in sales revenue this year.
Having been in the market for so long, what would you say are the key challenges and opportunities in the India market?
When we entered India, there were many established local and international players in the market. Indian consumers were very value conscious. Organised retail trade was at an early stage. Coincidentally, around the same time, our global management had declared that if Samsung should be known for anything, it has to be for quality products. ‘Change everything’ was the mantra. From then on, our direction changed greatly, to focus on quality. This new philosophy was also reflected in the way we operated in India with a focus on the value we created for the consumers. At the same time, Samsung and the retail trade in India worked together to nurture, help and learn from each other. This changed perceptions among the trade. Today we have the largest retail and distribution network in India with over 1.5 lakh retail partners. At Samsung, every innovation, design and idea revolves around the Indian consumers’ need. Our ‘Make for India’ initiative is a testimony to this.
A plethora of Korean and Japanese players have entered India in diverse categories. Chinese companies, too, are catching up. How does Samsung secure its loyalty among consumers in such competitive times?
In 2017, Samsung invested around $15 billion into R&D globally. Our investments in innovation through the decades has given us a legacy of world firsts and we now have our eyes on future innovation areas like making the Internet of Things (IoT) and 5G mobile networks a reality as well as helping develop artificial intelligence (AI) and autonomous driving and connected car technologies.
We recently saw Xiaomi overtake Samsung in the smartphone category in the last quarter of 2017. Your comments.
As a true market leader, our focus has always been the consumer. We continue to provide value to consumers with products designed especially for India. The value we add to their lives, to the society and the Indian economy is most important for us. This is why Samsung is India’s most trusted brand. There is a Samsung in the life of every Indian today, be it a television, smartphone, refrigerator, washing machine, AC or a microwave oven.
In India, our R&D centres are working on several India-centric innovations. These innovations have made our mobile phones as well as consumer electronics products more popular. Two decades ago, we committed ourselves to India, which was just opening up. Today, I can say with all my conviction that we have been a true partner, and we are prepared for the next big leap. Samsung will drive the IoT revolution in India over the next few years. This will be a game changer. We have the technology. We have the devices — across categories, from home appliances to mobiles to wearables. All these will talk to each other and make lives easier.
You know, we have built the backbone for Reliance Jio’s 4G LTE network, which is today the largest mobile data network. This is being expanded and when the network is fully ready, together we will take IoT and its benefits to every Indian home. This is leadership.
Samsung recently announced its plans to invest close to Rs 5,000 crore in the Indian market. Where and how do you plan to allocate the capital?
The Rs 4,915-crore investment in our Noida facility reinforces Samsung’s commitment to ‘Make in India’ and ‘Make for India’. This is the biggest FDI investment in the electronics manufacturing space in India.
Let me also tell you that we are the only brand that manufactures mobile phones fully in India and are helping the local manufacturing ecosystem in the country grow. Today, on the back of the Digital India movement led by millions of young Indians, we are witnessing a rise in adoption of electronic devices, smart appliances and mobile phones. A bigger manufacturing plant will help us cater to the growing demand for Samsung products across the country. With this new investment, we will double the production capacity of mobile phones and refrigerators at this plant, further consolidating our leadership in the mobile phones and consumer electronics segments. Additionally, we see this expansion of the plant as a catalyst for the development of a robust local electronics manufacturing ecosystem and generate thousands of new jobs across the country.
What has been Samsung’s total India investment? Where does India stand in terms of its global business?
India is very important for Samsung globally. Last year, even before research companies recognised India as the second largest smartphone market in the world, we announced fresh investment of Rs 4,915 crore to double the capacity of our plant in Noida. Our R&D centres in India have been consistently bringing out innovations based on strong consumer insights under our ‘Make for India’ initiative. Not only have these products been successful in India, many of them have done well in global markets, making them good examples of local solutions going global.
What are your views about India’s ‘Make in India’ and ‘ease of doing business’ initiatives?
Samsung has been manufacturing in India for over two decades now, and we are a shining example of the success of ‘Make in India’. Today, when India is at the cusp of the next manufacturing revolution being brought about by the ‘Make for India’ initiative of the government, we have recommitted ourselves there too.
We not only ‘Make in India’, we also ‘Make for India’, developing innovative technologies and products that are tailored to the needs of Indian consumers at our R&D centres in the country. This is why I say Samsung is truly an Indian company at heart.
With the controversy surrounding Galaxy Note7 device, would you say there was a brand erosion for Samsung? How did the company overcome the challenges?
Our consumers in India were eagerly waiting for the device when it was launched globally and they were certainly disappointed. The device was never launched in India and we discontinued it globally. But our consumers stayed with us, waited for the next flagship. They appreciated the responsible way in which Samsung managed the issue and reposed their faith in the brand. Not just that, we were voted the most trusted brand the same year. In fact, 2016 was a record year for Samsung in terms of sales across segments and that continued in 2017 as well. Our flagship smartphone Galaxy S8 broke all records and Galaxy Note8 saw huge demand, vindicating consumer trust in us.