Samsung Electronics Co., Ltd. & World Economy

Topic: Samsung Electronics Co., Ltd. & World Economy

Team Members: Bishwojit Das Bijoy, Marzia Parvin Mou, Sintheya Aktary Sinthe

Date: October 02, 2021

Abstract

Samsung Electronics Co., Ltd. is one of the world's leading multinational electronics manufacturers and sellers companies. Samsung Electronics is conducting its business operations worldwide. In addition to making a significant contribution to the global economy, Samsung Electronics is constantly creating huge jobs in different countries of the world. Bangladesh is no exception. In Bangladesh, there is a huge demand for various products of Samsung Electronics, especially mobile phones. Like other countries, Samsung Electronics is having a huge impact on the economy of Bangladesh and the growth of government revenue.

Keywords: Samsung, Economy

Samsung Electronics Co., Ltd. & World Economy

Introduction

Samsung Electronics Co., Ltd. is a multinational electronics company. Samsung is one of the world's leading electronics makers. The company has branches in almost every country in the world. Samsung Electronics Co., Ltd. is playing a significant role in the economy of every country in the world.

Samsung Group Founder Lee Byung-Chul founded Samsung Electronics Co., Ltd. on January 13, 1969 (Samsung Electronics). It is headquartered in Suwon, South Korea. However, he founded the Samsung Group in 1938 (Samsung Electronics). At first, he started a small business company with 40 employees. Over time, today that small company is conducting business in every corner of the world. At present, the chairman of the company is Lee Jae-Yong (Samsung Electronics).

Samsung Electronics has assembling plants and sales networks in 74 countries around the world (Fast Facts Samsung Electronics, 2020). It has created employment for about 267, 937 people (Fast Facts Samsung Electronics, 2020). In terms of revenue, Samsung Electronics Co., Ltd. is the world's largest manufacturer of consumer electronics. As of 2020, Samsung Electronics is the world's second-largest technology company by revenue, with a market capitalization of approximately 520.65 billion US dollars, the 12th largest in the world (Fast Facts Samsung Electronics, 2020).

Samsung Electronics Goals

Samsung Electronics is committed to fulfilling its responsibilities as a global company. Samsung follows a simple business philosophy (Fast Facts Samsung Electronics, 2020). Produces quality products and services, so that they can contribute to a developed world society by applying their technology and talents. To achieve this, Samsung Electronics places a high value on its manpower and technologies (Fast Facts Samsung Electronics, 2020). Samsung Electronics is committed to complying with local laws and regulations as well as the global code of conduct to all employees (Fast Facts Samsung Electronics, 2020). It believes that ethical management is an important means of building trust and confidence with various stakeholders, including customers, shareholders, employees, business partners, and local communities, to change the global environment (Fast Facts Samsung Electronics, 2020). Samsung Electronics is working to become one of the most ethical companies in the world through its practice of fair and transparent corporate management. They have taken appropriate steps to conduct their activities in all corners of the globe to create global employment. Also as an active presence company, Samsung Electronics conducts business under tax law by analyzing tax laws, tax risk prevention, and transaction laws of different countries of the world. The company plays an important role in the economies of different countries of the world by trying to pay the right amount of taxes (Samsung Electronics).

Contribution to World Economy

The contribution of Samsung Electronics Co., Ltd to the world economy is unimaginable as it has multiple branches in more than 40 countries around the world (Samsung Electronics Headquarters and Office Locations, 2021). The devices manufactured in these countries are exported throughout the world which causes cash flow and contributes to the global economy. Among all the countries, China and America have the most selling records of Samsung Electronics devices. The huge population of China as well as the other nations uses Samsung electronics products and this is a major offering to the world economy.

Before the global pandemic Samsung Electronics Co., Ltd had semi-annual sales of approximately 75.19 trillion dollars in total in 2019 (Ji, 2019). Unfortunately, Covid 19 has stopped the demand and production. So it affected the world economy as well. However, in course of time, all the nations are recovering gradually and many of the Samsung Electronics branches started production again. Korea, America, China, the Asian countries, African countries, and European countries have started production and their sales services add to the world economy. On March 31, 2021, the ‘net segment revenue’ of Samsung Electronics Co., Ltd in Korea was 10,033,479 KRW-(Korean won). In America, Europe, Asia and Africa, China the ‘net segment revenue was 20,686,422 KRW, 13,209,383 KRW, 10,827,379 KRW and 10,631,840 KRW respectively. The total ‘net segment revenue’ was 55,325,178 KRW in 2020 which increased to 65,388,503 KRW in 2021 (Samsung Electronics Co., Ltd, 2021, p.56). It means the ‘net segment revenue’ has increased 10,063,325 KRW only within a year. The increase in revenue gives an idea that the sales must have increased. More sales of devices mean more transactions of cash which is great for the world economy.

Bangladesh is also an important part of Samsung Electronics because a huge number of people use Samsung devices, mostly smartphones. Samsung Electronics does not only contribute to the world economy by selling devices but also creates employment opportunities. Though a lot of the production work is machine automated, a great number of workers are involved in production. In December 2020 about 267,937 employees worked in Samsung electronics around the world (Fast Facts Samsung Electronics, 2020). It is a reminder that employment is an inseparable part of the economy.

Though Samsung Electronics Co., Ltd has a great range of devices, Samsung smartphones are the most selling product. In 2021 the market share of Samsung smartphones alone increased from 18.4% to 20.3% (Heater, 2021). Besides, Samsung smartphones have been one of the most used devices throughout the world for a very long time.

In 2021 the total ‘profit for the period’ of Samsung Electronics Co., Ltd was $7,141,685 which was $6,415,487 in 2020 (Samsung Electronics Co., Ltd, 2021, p.1). It means the company's sales are increasing and so the profit is increasing. This increase in sales is important for the world economy as it resembles the world trade of Samsung devices.

So it can be said that Samsung Electronics has a huge impact on the world economy. Its production, sales, and service keep world trade flowing which is essential for the world economy.

Impact on Bangladesh Economy

The name Samsung is a very intimate name to the people of Bangladesh. Samsung televisions, refrigerators, mobile phones, and air conditioners are among the most broadly used electronics products in this country. Samsung Electronics has a vast impact on the economy of Bangladesh. The Korean brand Samsung has invested in setting up a factory in Bangladesh with the technical support of Bangladeshi company "Fair Group". In 2018 Samsung's electronics will be made in the factory of Fair Electronics in Narsingdi Shibpur Upazila near Dhaka. All of Samsung's low- and medium-priced electronic products sold in various stores across the country are manufactured in this factory in Bangladesh. The factory manufactures various Samsung electronics products such as Samsung televisions, refrigerators, washing machines, and air conditioners. Fair electronics owns 100 plus Samsung nationwide (Samsung Factory in Bangladesh, 2019). Most of the people in the country are more interested in using Samsung's electronics products as they are of superior quality. For that reason, there is no need to import electronics from abroad, which is increasing the country's production capacity and has a great impact on the economy. Fair electronics pays the maximum amount of VAT to the government of Bangladesh since Samsung's Electronics Manufacturing at the Fair Electronics Factory. That's why on the eve of national VAT day 10 December 2019 Fair group concern Fair electronics awarded nationally highest VAT payer in the manufacturing category for the fiscal year 2018-2019 by the National Board of Revenue (Fair Electronics awarded nationally highest VAT payer in the manufacturing category, 2020).

Samsung Bangladesh has grabbed the top spot in the Bangladeshi smartphone market, with 16.1 percent of the market share and a sales volume of more than 1.12 million handsets in 2019 (Samsung tops the Bangladeshi smartphone market, 2020). Samsung's mobile phone factory in Bangladesh has an annual production capacity of 3 million units (দেশেই তৈরি হবে স্যামসাং মোবাইল, 2018). Bangladesh government lowers import duty on raw materials and parts used in cellular phone manufacturing or assembly and the mobile phone or handset tax produced in Bangladesh is only 5 percent (Smartphone import to be costlier, 2019). This is why the cost is now as low as 20 percent due to the production of domestic Samsung mobile phones now compared to imports. Most of the smartphone users in Bangladesh use Samsung brand handsets. In June 2021 about 31.97% of total smartphone users used Samsung smartphones in Bangladesh (Mobile Vendor Market Share Bangladesh, 2021). Quick to avail of the tax benefit, five local and international brands have already started assembling mobile devices, catering to about 30 percent of the country's annual demand for 3.5 crore handsets (Smartphone import to be costlier, 2019). According to Bangladesh Telecommunication Regulatory Commission, the current annual handset sales in the country amounted to Taka 10,000 crore (Smartphone import to be costlier, 2019). Over 1.45 crore handsets were assembled in the country's 10 manufacturing plants in fiscal 2019-20, comprising Fair's-(Samsung Electronics) 9.73 lakh (Hasan, 2021). From this, it's understood that Samsung brand mobile phones play a big role in the economy of this country.

Thousands of Bangladeshi workers are working in Samsung's electronics manufacturing plant. Thousands of unemployed youths are working in these factories who have completed their studies and are unemployed in the country. These unemployed youths are working for Samsung electronics so that they have been able to contribute to a big source of income in the country. Bangladeshi workers are going to Korea through this fair group where they are undergoing various training to make all these electronics at Samsung's main company. As a result, the workers are becoming proficient in these pieces of training and giving them ideas about training other unemployed youths back in the country, helping them in their work. Samsung Mobile is one of the world's leading smartphone rating companies, with many people in the country using Samsung smartphones. Many unemployed youths are opening Samsung's smartphone showrooms in the country, which is benefiting them and making a huge contribution to the country's source of income. The people of Bangladesh are also interested in using electronics as Samsung's electronics are of very good quality. Due to which many people in Bangladesh have got employment opportunities and unemployment is decreasing in the country. Samsung Electronics & Co. Ltd.'s source of income has increased in the country after the expansion of Bangladesh.

Conclusion

Several famous electronic companies in the world are competing with each other such as Apple, Huawei. Dell, Hitachi, Sony, and so on. Among the mentioned companies Apple is known to be a high-end brand having quite expensive devices and thus it gains maximum revenue. However, the next position in terms of revenue is taken by Samsung Electronics & Co., Ltd. In 2020 Samsung Electronics ranked second position in the world by revenue having revenue of 221.6 billion US dollars. It is because they have a huge range of devices as well as a large price range for attracting people of all classes. Samsung Electronics is not only growing on its own but also it owns more companies like Smart things ( Home Appliances ), Harman International Industries ( Audio, Visual and Connectivity company ), Loop Pay or Samsung Pay ( Digital Wallet ), Tele world Solutions ( Network Service Provider ) and Nova led ( Organic Electronics). By owning these companies Samsung Electronic has increased its contribution to the world economy because more activity of the company will lead to more sales, more sales will lead to more transactions and transactions keep the economy going.

It would be quite impossible to find someone in this world who has not heard of Samsung Electronics. Even though not everyone understands the importance of a multinational company in the world economy. Samsung Electronics & Co., Ltd has become an inseparable part of the global economy.

References

01. Samsung Electronics. Retrieved from www.samsung.com

02. Fast Facts Samsung Electronics. (2020, December). Samsung Newsroom.

Retrieved from https://news.samsung.com/global/fast-facts

03. Samsung Electronics Headquarters and Office Locations. (2021). Craft.

Retrieved from https://craft.co/samsung-electronics/locations

04. Ji, J. M. (2019, August 18). 20% of exports come from Samsung Electronics.

Korea JoongAng Daily. Retrieved from https://koreajoongangdaily.joins.com/2019/08/18/industry/20037-of-exports-come-from-Samsung-Electronics/3066892.html

05. Samsung Electronics Co., Ltd. (n. d.). K-IFRS Independent Auditor's Report

Opinion. Samsung. (p. 56). Retrieved from https://images.samsung.com/is/content/samsung/assets/global/ir/docs/2021_con_quarter01_all.pdf

06. Heater, B. (2021, June 7). The global smartphone market continues to rebound with

26% Q1 bump. Tech Crunch. Retrieved from https://techcrunch.com/2021/06/07/global-smartphone-market-continues-rebound-with-26-q1-bump/