Samsung to drive growth in South-east Asia through Galaxy, consumer products

Singapore

SAMSUNG Electronics will drive its expansion in South-east Asia and Oceania around flagship products from its Galaxy portfolio and consumer electronics segment, its recently installed president and chief executive officer (CEO) for the region, Sangho Jo, has said.

"I firmly believe that South-east Asia and Oceania have strong potential to become one of the fastest growing regions for the business in the next decade," he told The Business Times.

Mr Jo, 56 this year, is not new to the region, having worked in South Korea's largest technology group in Singapore, Vietnam and Malaysia in the past. With more than 30 years of experience across business groups and geographies, he was last in charge of Europe. He now wants to build on the strong business and operational foundation the group has, and grow the Samsung brand in the region.

He is banking on what he calls a "young region". Statistics platform Worldometer puts the median age in South-east Asia at about 30.2 years old; that of Oceania is 33.4 years old.

"This young generation will be the ones powering a digital future in the region, and markets here will certainly be integral to the long-term growth plans for Samsung," he said.

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In the mobile communications and consumer electronics segments that he oversees, the contribution from South-east Asia and Oceania region has held stable, accounting for around 8 per cent of global revenue, based on the 2020 financial results.

For the quarter ended Dec 31, 2020, Samsung Electronics posted a 2.8 per cent increase in consolidated revenue to 61.55 trillion won (S$72.71 billion) and a 26.4 per cent increase in operating profit to 9.05 trillion won.

For the entire year, it reported 236.81 trillion won in revenue and 35.99 trillion won in operating profit, up from 230.40 trillion won in revenue and 27.77 trillion won in operating profit in 2019.

Looking ahead, Samsung Electronics expects overall profit to weaken in the first quarter of 2021. But its mobile communications business is set to see robust sales of flagship smartphones such as the Galaxy S21 and new mass-market models.

The consumer electronics division will likely post stable results despite weakness in seasonal demand, underpinned by new product launches and introduction of new premium lineups.

For 2021, the group expects a recovery in overall global demand, but uncertainties persist over the possibility of recurring waves of Covid-19.

Mr Jo said the pandemic accelerated the speed of digital transformation last year, with more people going online for work, socialising, entertainment and shopping, among other activities.

"This is even more important and pronounced for us in the South-east Asia and Oceania region, with our large group of young, digital natives and immense opportunities for building a digital economy.

"Much of this is driven by greater adoption of 5G, artificial intelligence (AI) and the Internet of Things (IoT)."

Samsung will drive the regional business around its Galaxy portfolio of phones, and products from its consumer-electronics segment - these include display and home appliances such as refrigerators and washing machines, with personalised technologies, Mr Jo added.

The group's mobile-communications business plans to increase sales of flagship, foldable and new mass-market 5G models, while keeping up its efforts to improve costs.

Consumers in this region require a wide range of product segments, given that they span diverse age groups, cultures and incomes, the CEO said.

"Hence, affordable or mid-tier products will continue to be important for us as another key thrust to drive business growth," he said, adding that the enterprise/business-to-business (B2B) space also continues to be important for the group.

Samsung also looks to support the digital ambitions of nations, industries and communities in South-east Asia and Oceania.

"We will continue to look closely at new initiatives and programmes, working with local partners, to give back to the communities in which we operate, beyond business performance," Mr Jo said.

With Singapore accelerating nation-wide digitalisation, the Lion City "offers the ideal setup for Samsung to engage government agencies, local companies and the Singapore offices of global companies to push the envelope of technology in areas such as 5G with its exciting potential for businesses and consumers", he said.

In a survey conducted by the group, 87 per cent of Singapore households are found to own at least one Samsung product, making the Korean brand the market leader across product categories such as smartphone, TV, refrigerator, monitor and solid state drive (SSD), a storage device that uses integrated circuit assemblies to store data.

The market bellwether for South Korea has been a top pick among retail investors, who sent its share price soaring to more than 90,000 won in January, from low 40,000 won in March 2020.

Citi has a target price for Samsung at 114,000 won, underpinned by the group's solid mobile earnings.

The stock was trading at around 80,900 won on Wednesday.