Samsung and LG Strengthen Global South Presence... Attention on 'Investment Packages' Amid Supply Chain Restructuring

Major corporations such as Samsung Electronics, LG, Hyundai Motor Group, and SK are accelerating their efforts to target the 'Global South' by expanding local investments during their visits to India and Vietnam. There is growing attention on the possibility that these leading firms will announce 'investment packages' that include expanding production facilities and investing in research and development (R&D) as part of their strategies to secure both emerging consumer markets and production bases simultaneously.

According to the industry on April 20, business leaders including Samsung Electronics Chairman Jae-yong Lee, Hyundai Motor Group Executive Chair Euisun Chung, and LG Group Chairman Koo Kwang-mo departed for business trips on the previous day to join the India-Vietnam economic delegation. When asked by reporters at the Gimpo Business Aviation Center about his determination for the economic delegation, Chairman Lee smiled and left without comment.

원본보기 아이콘

This delegation includes the heads of the top five business groups as well as leaders from POSCO, HD Hyundai, GS, Hyosung, CJ, and more, totaling around 200 business representatives. The six-day, five-night itinerary begins in India from April 19 to 21, then continues in Vietnam from April 21 to 24. The high participation reflects the business potential of these regions. In 2023, when then-President Yoon Suk-yeol made a state visit to Vietnam, a similarly large economic delegation of around 200, including business leaders, attended. The Korea Chamber of Commerce and Industry will oversee the Vietnam schedule, while the Federation of Korean Industries will handle the India schedule, with plans to announce business agreements (MOUs) between companies.

Given that both India and Vietnam are countries of significant interest to Korean enterprises, there is heightened anticipation that major corporations will unveil 'investment packages.' India, with a population exceeding 1.4 billion and a median age of 28, is considered a representative emerging market due to its young demographic structure. Recently, major Korean companies have been implementing localization strategies in the Indian market. Electronics companies such as Samsung and LG are targeting demand from first-time buyers as the purchasing power of this populous nation rises, thereby increasing local sales.

LG Electronics, which entered the Indian market in 1997, listed its subsidiary on the Indian stock market last year and declared India as a hub country for its 'Global South Strategy.' In addition to its existing Noida and Pune plants, LG is constructing a new plant in Sri City and plans to expand its production lines to include air conditioners this year and refrigerators, washing machines, and more by 2029.

Hyundai Motor Group also aims to make India its second-largest market after the United States by 2030. Hyundai operates its first and second plants in Chennai, India, and began full-scale production at the Talegaon plant, which it acquired in 2023. Hyundai and Kia achieved record-breaking results in the Indian market in the first quarter of this year. Samsung Electronics is strengthening artificial intelligence (AI) software and architecture development at its Bengaluru R&D Center and recently launched new AI-based air conditioners tailored to local climate conditions in India.

Samsung Electronics Chairman Jae-yong Lee is departing through the Seoul Gimpo Business Aviation Center (SGBAC) in Gangseo-gu, Seoul on the 19th to accompany the India-Vietnam economic delegation. Photo by Yonhap News.

원본보기 아이콘

There is also keen interest in whether Chairman Lee will meet with Mukesh Ambani, Chairman of Reliance Group, India's largest conglomerate. When Ambani visited Korea in November last year, he had dinner with Chairman Lee and discussed expanding cooperation in new business areas such as semiconductors, telecommunications, data centers, and batteries. As Reliance Group is building massive AI data centers across India, there is speculation about potential collaboration with Samsung. In particular, as investments in AI infrastructure increase, there are expectations that the scope of cooperation between the two companies could expand further.

Vietnam continues to play a key role as a production base for major Korean companies. At the same time, with its growing young population, Vietnam is increasingly recognized as a promising market. Vietnam is Samsung Electronics' primary base for smartphone production, accounting for over 50% of its global output. Samsung operates six manufacturing plants, one R&D center, and one business entity in major regions across Vietnam.

Its affiliate, Samsung Electro-Mechanics, recently decided to make an additional investment of USD 1.2 billion (KRW 1.8 trillion) in its Vietnamese production subsidiary to manufacture semiconductor substrates, specifically flip-chip ball grid arrays (FC-BGA). LS Group is also actively utilizing its Vietnamese plant for the production of extra-high-voltage cables. LS Eco Energy operates LS-VINA in Haiphong, Vietnam, and LSCV in Ho Chi Minh City, in the southern region.

An industry representative emphasized, "India and Vietnam are both strategically important for our companies in terms of sales and production." Another industry official added, "Entering India and Vietnam means more than just the appearance of new competitors for local firms. It could serve as a catalyst for transforming the local industry into one with higher added value."

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.