SDS to expand investment in China
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Chinese consumers look around a booth set up by Samsung SDS at an industry fair in China in May. The company plans to expand investment in the neighboring country to attract new customers there. / Courtesy of Samsung SDS
Samsung affiliate plans to focus on ‘smart manufacturing’
By Kim Yoo-chul
Samsung SDS, the nation’s top system integration (SI) solutions provider, plans to increase its spending on the lucrative “smart manufacturing” market in China. The Samsung affiliate has been accelerating efforts to find new business momentum.
“With its strong brand awareness and proven track record in managing various technology solutions that it has achieved in Korea, Samsung SDS will aggressively expand its smart manufacturing business in China,” the company said in a statement to The Korea Times, Wednesday.
The Korean economy is expected to remain stagnant in the next few years. Thus, the Samsung affiliate is looking to increase its revenue stream from overseas sources, and China is a market that it can’t afford to lose, said company officials.
SDS plans to increase its overseas revenue percentage from last year’s 35 to 60 in the next five years.
Last year, the Seoul-based outfit reported 6.10 trillion won in revenue and 558 billion won in operating profit. SDS is the first Korean SI provider to exceed 6 trillion won in annual revenue.
“When you look at the population of China and the modernization rates in leading Chinese cities, you’ll realize it’s vital to launch aggressive promotional campaigns and investments in China’s manufacturing markets,” said a company spokesperson.
SDS generates revenue by selling system management, integration and control services to governments-led projects in Asia and the Middle East, as well as locally to financial companies.
However, the company believes that the smart manufacturing business is far better in terms of profit margin.
Smart manufacturing reflects advancements in management capability. In a Time Magazine supplement, Rockwell Automation CTO Sujeet Chand and UCLA Vice Provost for IT Jim Davis state, “smart manufacturing marries information, technology and human ingenuity to bring about a rapid revolution in the development and application of manufacturing intelligence to every aspect of business.”
Smart manufacturing “will fundamentally change how products are invented, manufactured, shipped and sold. It will improve worker safety and protect the environment by making zero-emissions, zero-incident manufacturing possible,” Chand and Davis add.
The SDS spokesperson concurs: “Investments in smart manufacturing infrastructure are essential to securing China’s industrial future. Smart manufacturing will reduce the use of energy, improve environmental sustainability and lower the cost of products.”
While the company statement didn’t disclose further business details, it stressed that the company has been strengthening the distribution systems of its solutions.
By the end of this year, the Samsung affiliate plans to complete the construction of its global delivery centers in Xian, China and India.
It is also teaming up with Samsung Electronics to better manage its SI business in China. The centers will be tasked to develop customized solutions for SDS’ existing and future business partners in China and India, and to expand applications according to market situations, the statement read.
Samsung Electronics is investing as much as $7 billion to build its first overseas memory chip-producing plant in Xi’an, with administrative and financial support from the Beijing government.
SDS’s steady progress in China has prompted it to participate in one of the major industry fairs there last May.
It displayed its solutions and platforms at the Urban Tec China Conference 2013. Company officials say the participation was a part of the company’s continuing efforts to entice new customers.
“As a good corporate citizen, we’ve been teaming up with regional communities to improve infrastructure in rural areas and to help the underprivileged develop information technology skills,” said the spokesperson.
Leading market research firm Ovum recently claimed that the Korean IT services market is now one of the most mature ones in Asia. It will grow by 7 percent over the next three years and is expected to be worth $16.4 billion by 2016.
Meanwhile, SDS is in talks with the Shanxi government in China about supplying the province’s automated fare collection systems, ICT infrastructure services and intelligent transportation systems. Beijing is transforming the province as one of the most advanced in the nation.
According to Ovum analyst Jens Butler, with the main Korean players’ drive to expand into higher-growth markets and the geographical, educational and language advantages of China, SDS’ chances of successfully expanding into Shanxi may start to grow, at least from a near-shore perspective.