Samsung Electronics logo on a building in Seoul, South Korea. Photo: AFP/TTXVN
The Market section of The Korea Herald newspaper on March 27 had an article welcoming India with the title “Korean businesses see new growth drivers in India”. In the context of escalating US-China competition, global supply chains are being reshaped and India, the world's fifth largest economy, is receiving new attention from “giants”. Korean technology.
India boasts the world's largest population of more than 1.4 billion people and has a strong economy with significant growth over the past three decades. South Korea's major conglomerates, which have gained a foothold in the growing market, have recently been pouring resources into industries as they shift local operations from manufacturing to marketing to research. research and development (R&D).
“While China is increasingly shifting to a closed economy, Korean companies are flocking to India, a more open and vibrant economy. Especially when consumer purchasing power increases sufficiently, the country will become one of the important growth engines,” said business administration professor Kim Dae-jong at Sejong University.
Samsung Electronics has accelerated business expansion in India in an apparent move to mitigate risks from China, where South Korea's largest conglomerate is struggling to lift stagnant sales. According to industry sources, the tech giant is not only betting big on the purchasing power of India's huge and young population but also wants to turn the country into an integrated hub for manufacturing, sales and R&D.
Last week, Vice Chairman and Co-CEO Han Jong-hee visited Samsung BKC, the company's flagship connected lifestyle store located in Mumbai. Samsung BKC, which opened in January, marks Samsung's first flagship brand store in India after launching in major cities like New York and London.
While visiting the store, he emphasized that India is one of the largest and fastest growing markets globally, presenting huge opportunities for Samsung. He also emphasized the company's commitment to the Indian market by bringing artificial intelligence and hyperconnectivity to consumers there.
“India is the next big playground for AI and our flagship Samsung BKC store embodies our vision of 'AI for All' and will showcase 'One Samsung'. … India has a large population of young tech-savvy consumers, which inspires us to innovate. Here, thousands of young, enterprising people are working in our R&D centers to bring cutting-edge technologies like AI to the world. We are proud of them,” the Vice President said.
The company has been present in India for more than 28 years and began operations there in 1995. Chairman Lee Jae-yong has also maintained a friendly relationship with Prime Minister Narendra Modi. Many times, the head of Samsung has emphasized his will to make Samsung a “truly local company” in India, not just a foreign investor.
Samsung operates the world's largest mobile phone manufacturing plant in Noida, supported by tax incentives from the Indian Government. The Chennai factory produces Samsung home appliances and TVs, and the Samsung R&D Institute India-Bangalore is the tech giant's largest R&D center outside of Korea. In addition, they recently established an organization to research chips for solid-state storage devices for computers.
Samsung is also trying to attract Indian consumers by opening a series of high-end experience stores in major cities here. As a result, it regained the top spot in smartphone sales in India last year, holding a 19% market share, beating China's Vivo (18%), Xiaomi (17%) and Realme (12%), market research firm Canalys said. According to the company, the net profit earned by Samsung India Electronics reached 1,150 billion won ($858 million) last year, more than doubling from 508.5 billion won the previous year.
“Samsung has manufacturing groups, research institutes and design organizations to produce products thoroughly optimized for local needs and is expanding significantly,” said an anonymous industry official. our workforce there.”
Meanwhile, LG Electronics, the world's largest home appliance manufacturer, also has impressive growth in India. Last year, the India unit posted revenue of 3,300 billion won, up 33.6% from 2,400 billion won in 2018, according to a recent regulatory filing.
Logos of LG Electronics and Samsung Electronics. Photo: Yonhap
Like competitor Samsung, LG also has a wide domestic business network, from sales, production to R&D. More recently, the company has bet on the soaring premium alliance market there. Last year, the company invested about 31 billion won to expand production of premium two-store refrigerators at its Pune facility, while also increasing investment in the air conditioning segment with an annual growth rate above 30%.
Another strategic focus is business-to-business beyond its leadership role in the TV and home appliance sectors. The company has launched a series of showrooms across India for corporate customers, called Business Innovation Centers. After centers were opened in Noida, Mumbai and Bengaluru, a fourth facility showcasing commercial displays and equipment for hospitals, schools and offices was recently opened in Chennai.
“LG Electronics has established itself as a premium brand in the Indian home appliance market. Based on that success, we see great potential in the current business-to-business (B2B) model,” an LG official said.
LG aims to increase the proportion of B2B sales from the current 10% to 25% of total sales in India in the long term.
According to the state-run Korea Trade Investment Promotion Agency, India's home appliance market is expected to more than double from $10.93 billion in 2018 to $21.03 billion in 2025. .
Meanwhile, LG Energy Solution, the country's largest electric vehicle battery manufacturer, has established itself as the leader in the electric two-wheeler market in India with over 50% market share. Key customers include TVS Motor and Ola Electric, the leading electric scooter manufacturers in India.
“We saw an opportunity early on in the Indian light electric vehicle market and established a local sales team,” an LG Energy Solution official said. This helps us respond to customers' needs quickly and win their trust within just one year.”
Hyundai Motor Group, the world's No. 3 automaker, has been a major player in India, consistently holding the second-largest market share of about 15%. Kia, with its popular sports utility vehicles, captured a 7% share of the Indian passenger car market in 2022. India accounted for 14% and 9% of Hyundai and Kia's worldwide sales, respectively. , significantly outperforming other international competitors.
In January, Hyundai announced a significant increase in investment in India, adding another 1,000 billion won in investment in Talegaon. Together with the initial investment in Tamil Nadu, the total investment amounted to 4,000 billion won.
This new investment aims to turn the GM auto factory that Hyundai acquired into a manufacturing hub. The Talegaon plant has an annual production capacity of about 130,000 vehicles. Hyundai will consolidate and upgrade its production facilities and begin full operations next year.
The previous investment in Tamil Nadu announced in May last year included the establishment of electric vehicle manufacturing facilities and charging infrastructure, and the establishment of the Hydrogen Valley Innovation Center in partnership with of the Indian Institute of Technology Madras, Hyundai's second hydrogen project after Guangzhou, China.
Hyundai-Kia already has a significant manufacturing presence in India, with Hyundai operating two complete auto plants and Kia boasting the country's highest-tech auto plant.
“In our global strategy, India's role is paramount, with our production capacity here set to double that of the US, currently at 700,000 units. Operating capacity in China is reduced to less than half of our (maximum) 1.5 million units,” a Hyundai Motor Group official told The Korea Herald.
Domestic manufacturing is crucial to entering the Indian market, as imported vehicles face tariffs ranging from 70% to 125% set by the Modi government to boost domestic production.
“While Hyundai-Kia has been successful in securing its position as the third largest global automaker in recent years, surpassing its peak market share of 8.9% in 2014 remains “It's hard to grasp. An important factor leading to this is their reduction in market share in China,” said auto analyst Moon Yong-kwan at Shin Young Securities.
“Despite the importance of established markets such as the US and Europe, their relatively stable demand contrasts with the dynamic growth potential of emerging markets. Due to increasing competition The more severe the situation in China, the strong performance of Hyundai and Kia in the Indian market can offset the decline in the Chinese market,” he added./.
