Samsung, the South Korea-based electronics manufacturing giant, announced the official launch of its regional Levant office this summer, to be based in Amman, Jordan. Executive was invited to attend the opening of the office on an all-expenses-paid trip, and had the opportunity to speak with Sunny Hwang, the President of Samsung’s new Levant Operation Office.
E Why did you decide on a regional office?
The Samsung brand in the global market is at this moment pretty much enjoying its status. So we are doing very well in the TV businesses and the cell phone businesses and all other business areas. For example, in the TV business we have been in the number one position since 2006 and our position is getting stronger. But in the Levant area, Samsung’s business compared to our global standard is very weak. Lebanon is a little bit stronger than any other Levant area. We are devoted to our weakest point and we want to attack it, and actually at this moment this is just the beginning. We put our head office here and by next month we will open an office in Damascus, and in the first quarter of next year we will also open an office in Beirut. That is our target.
E How can you evaluate the regional market given the current circumstances?
Before I came, I worked in Sweden, in the Nordic area. And it was the first region hit by the recession. So I know what the global recession is and I know what can be influenced by the global recession in our operations. But I feel that the Levant area is the least affected. If I want to divide by country, I think that Jordan is hit the most.
E What about internationally? How are you affected as Samsung?
In the last quarter last year, we made a big loss. The important thing is that we also expected the first quarter to be terrible. But when the results came, it proved that we had already recovered. It didn’t show a strong profit, but in the first quarter we turned the direction to profit. The market is recovering at a very slow pace. Nobody is expecting the market to recover within this year — it will very slowly recover until the end of next year. When the Korean-Asian financial crisis came in 1999, we restructured everything, and Samsung stood very tall at the time. So thanks to that we could make this very strong foundation. During most of this time we did restructuring and all the changes helped. So we did a lot of changes since the second half of last year. We restructured ourselves and strengthened our organization.
E Now in the region, what challenges are you facing to keep clients?
What I found in the last four months when I came here is that the only problem is that we did not communicate successfully with the consumers, so they do not know what Samsung is, and what Samsung products can give them. So the lack of knowledge about Samsung products is why there is so much of a gap between the global level and the level in the Levant.
E What is your strategy? What are the steps that you are planning to take in the near future?
We had great difficulty to communicate because we did not have our organization here. So what we could do before is to rely on our partners. But by nature, their interest is to sell and make profit. They do not [want] to put money [into] the Samsung brand [to see benefits] over the next 10 years, so it is a short-term profit. Only Samsung as an owner of the brand can work for 10 or 20 years later. That is why we have not done the right marketing communication or investment in the last 10 years. This is the first time we are marketing and public relations will be managed by Samsung ourselves. So we can carry our investment for the long term.
E What is your current share of the market in the Levant region, compared to Nokia?
When we are talking about mobiles, Nokia is about 70 percent, and Samsung is about 20 percent. And Sony-Ericsson is getting weaker and weaker.
E What about other regions?
In some countries, Samsung’s share can be less. But in most countries it is about 25 percent.
E Are you focusing on certain products here in the region?
We have many groups, and we cannot neglect any part of it. We have audio, video, flat screen TV, and the LSA TV is the most important one. And as you might know, we had a very good launching a week ago in Beirut in Skybar, so that is the new field of the flat screen TV market. We are creating the market at the moment. LCD flat panel TV is the strongest point and we should push that, and we should utilize it, air conditioning also. In cell phones we are number two in the world after Nokia, but we should be a stronger number two. Already in France, Samsung has been number one for the last four years. We beat Nokia in France. Benelux states are to lead, Russia also and many other countries, so why not here in the Levant?
E Last quarter demand decreased and you ended up in the red. Has this affected your pricing structure and what have you changed since?
We cannot change the pricing, because then we will be out of the market. I do not think we increased the price, but we did a lot in cost cutting, like all the executives of Samsung had to decrease their salaries by 30 percent — every executive. Instead of firing people, we chose to decrease the benefits. Today we can only travel by [economy] class.
E What are the products that were the most affected… TVs or mobiles?
It is not a certain product that is affected. We have to [differentiate between the] consumer section and business-to-business section. The global crisis immediately attacked the [latter] section, because every company is holding its purchases. So in our products there are a lot of business-to-business products like monitors and printers. They are also selling to consumers but we are talking about corporate. Consumer sales have not been affected that much, like TV sales.
People are cutting their traveling costs. So, because they are staying at home, they need a TV!
E How many people are you going to hire for this office?
That totally depends on the performance and the sales results. There will be no fixed amount of people. It will depend on the operation size. When I was in Sweden, our turnover was $1 billion, and I had 300 people.
E Here, what do you expect the turnover to be?
In three to four years our target is to reach $1 billion. [Today], for the Levant, it is around $200 million. Next year our target is $500 million.
E What are your expectations for the Levant market?
Well, my dream and my mission in the Levant is to be first in one year’s time from today, to reach the global average in TV sales and all sales, and also brand. Our branding in the Levant is quite low because we haven’t invested that much, but we will do our best to reposition ourselves. That means bringing brand preferences. Sales wise, next year will be about two times growth. And every year two times growth. That is a possibility in this market, because it is a virgin market.