No plans to set up manufacturing plant: Samsung

Due to rapid development seen in the market, Samsung is focused on establishing more service centres in Pakistan.

KARACHI: Samsung Electronics enjoys a significant hold on the electronics market in Pakistan and about 23 per cent of the cellphone market share. However, the viability of setting up a manufacturing plant within Pakistan has not yet been established, said General Manager Samsung Electronics Pakistan, Steve Han, in an exclusive interview with The Express Tribune.

Given the rapid development seen in the Pakistani market over the past two decades, Samsung is fully focused on establishing more service centres across the country. The company has also appointed ‘Teletec Enterprises’ as the official distributor of its cellphones in the local market.

“A plan for setting up a production plant in Pakistan could be considered only a consistent market growth is seen and abundant availability of specialised human resources can be ensured,” he explained.

The lack of industrial infrastructure support is another issue that has influenced the decision to establish a manufacturing facility. Han said that a lot of support will be needed from the government and business sectors to secure a robust local production facility.

When asked about the investment the Korean firm has made in Pakistan, Han replied that other than the obvious monetary investments, Samsung has also spent heavily on network enhancement and transfer of technology and expertise.

“The major financial investment has been in the form of our brand shops that we have set up all over Pakistan. This has also allowed us to penetrate further into smaller cities,” he said.

There has also been an extensive transfer of technology from Samsung to local distributors. “We regularly invite our Korean engineers for extensive training sessions so that better products and services can be provided to local customers,” Han pointed out.

When asked if the firm is interested in targeting a possible niche market in rural areas, Han responded by saying that the company is fully aware of the potential of Pakistan as one of the most promising and evolved markets. He shared that efforts are underway to expand service outreach and availability of products in rural areas.

“For this purpose, we are increasing the number of dealerships in rural areas, where the rural customer can also purchase our products and receive high quality service,” he said.

Samsung does not overlook the potential of the rural market and offers marketing promotions from time to time. This is not done just to maintain brand visibility but to provide recreational activities for people as well, he added.

Nonetheless, the multinational has faced problems due to shortage and high costs of utilities like electricity and fuel. “However, through effective planning and proactive solutions we have been able to overcome these hurdles,” claimed the GM.

Han expressed confidence that none of their competitors have the strength or capacity to challenge Samsung’s leadership in more than two business categories. “Sony can be considered a healthy competitor in hi-tech televisions, but not in any other product category. Meanwhile, Nokia is a healthy competitor in cellphones, but not in any other category of electronics,” he responded to a question on competition Samsung faces in Pakistan.

Sharing his opinion on the Pakistani market, he said that it is a responsive market with significant buying power among customers. Comparing it to other markets, he said that there is always variance among buyers living in different countries or regions of the world. However, many commonalities can be found among the clientele living in Europe, North America, Japan and Australia. These customers give utmost importance to high quality, while they do not consider price a major deterrent.

On the other hand, the customers in Pakistan and other developing countries seek quality, but are unquestionably more price conscious. “However, now Pakistanis are much more aware of actual quality, innovation and reliability,” he added.

This phenomenon has given rise to a segment of customers who do not compromise on quality. They seek reasonable prices but do not buy cheap, low quality or low-tech products, according to Han.

Published in The Express Tribune, August 12^th, 2010.