Mr. Shin, since 1988 Samsung Electronics has a maquiladora plant in Tijuana. This year you'll celebrate the 5th anniversary of the establishment of Samsung Electronics in Mexico. Looking back, what were the main developments you went through?
First of all I'd like to clarify my responsibility in Mexico City is to sell our product in the domestic market. On the other hand, we have a manufacturing facility in Tijuana, which is about 600,000 m2. We are producing TVs, computer monitors, and also some key components for our production in Tijuana.
As you mentioned, we started manufacturing in Mexico in 1988. On the other hand, my operation in Mexico City started in 1995, right after the Mexican economic crisis. Since then, we've been growing more or less 100% yearly. This year we are looking for a little bit more than 300 million USD sales. In the next three years, we are expecting to double this figure. Recently, our sales proportion for telecommunications has grown, especially cellular phones. This year, we will sell 400 thousand cellular phones in Mexico. Of course, we don't have low-end and mid-end types of products, we are selling high-end cellular phones. But in the next three years, our sales portions for telecommunications is going to be around 50 percent.
1998 was the year that the Samsung cellular phone was introduced to Mexico, a telecommunication market which is growing rapidly. How do you see the position of Samsung in comparison to your competitors, for example Nokia, Motorola, Ericsson?
We've been trying to position our brand as a high-end product, not as a low-end pre-paid cheap product. At this moment we are producing our cellular phones in a Korean factory. Meanwhile, Nokia and Motorola have their factories inside the NAFTA territory so we are trying to establish a factory to produce our cellular phone either in the U.S.A. or Mexico, but Mexico would be more feasible.
You are mentioning that you want to establish a new plant to produce cellular phones. Will it be in Tijuana or somewhere else?
We have a couple of options. We are studying locations in Tijuana or any other place inside the Mexican territory.
The cellular phone is going to be very important in the future for everyone, not only for traditional functions but also concerning wireless e-commerce transactions. What is the potential you foresee in Mexico for these developments?
Mexico doesn't have enough infrastructure yet. Even in Korea, those technology innovations are starting. Mexico will begin to follow this trend of transaction networks in a couple of years.
What are your steps towards serving this kind of demand that will come to Mexico?
Within a couple of months we will introduce an audio music cellular phone. Sometime next year, we'd like to introduce a cellular with Internet function.
What would be the figures you plan to invest in those projects?
Well, we are investing a lot of money to promote our cellular phone. I cannot say how much, but it's a lot. Whenever we introduce a new cellular phone, we have launching programs with carriers. | By offering those advanced cell phones, how do you see Samsung three years from now talking in terms of percentage on the telecommunications market?
Korean companies only have one system CDMA, but in Mexico the TDMA has around 70% market share. So Korea counts with only 30% of the cellular market in Mexico. When it comes to the CDMA cellular, this year we'll have a 20% market share. If we open the factory here, we'd like to have more than 50% of the market share by introducing new functions, systems, etc.
Mexico manufactures around a fifth of all color TV's in the world and its TV market is growing ten times faster than the growth of the GDP. How does Samsung benefit from this development?
In Mexico we don't collect figures of the actual number of sales, such as in the U.S.A. and Europe. We are looking for a higher than 2 million TV demand this year. This year we want to sell around 400 thousand units. If we talk about the total market, our position isn't that high. Our Tijuana factory has a 3-million production capacity. Most of it is focused to other countries such as the U.S.A. and Latin America. We have the potential to promote our television business here in Mexico.
Where do you see the main challenges for Samsung Electronics in Mexico?
Mexico is a NAFTA country, so whenever we introduce our product to the Mexican market, if we don't have a manufacturing facility in Mexico, it's difficult because of the high duty levels (20-30%).
At this moment a delegation from Singapore is in Mexico to negotiate a FTA. Do you foresee any similar developments between Mexico and Korea and what would be your expectations of such an agreement?
We are asking our authorities to carry out those discussions with the Mexican government. Our government has the intention to promote these agreements. We already have a trade agreement with Chile and I understand our government is looking for a similar one with the Mexican government.
Mexico is experiencing a unique democratic transition. What will be the impact of the new administration on the bilateral trade relations?
I believe it's going to be much better with the new President-elect for he has been in the business area. We hope in the future there will be an open trade between Mexico and Korea.
Working in a highly competitive sector with huge potential, how do you see Samsung a few years from now in Mexico and what can Mexico expect from Samsung's engagement in Mexico?
Since 1988, we have been investing almost 500 million USD to establish manufacturing facilities and sales. We are constantly conscious that Mexico has a good location to manufacture our products and export them to other countries. We expect to expand our investment in the future. For instance, we are thinking of a new computer assembly factory in Tijuana. It will start operations some time this year. We are looking for the cellular assembly facility too. Mexico has a great domestic market and of course, an opportunity to export. |
Samsung Electronics Mexico