It’s been a hot seller in Australia, now the Samsung Galaxy Z Fold 3, has turned into a big problem for the South Korean Company after the letter “Z” became a symbol of support for the invasion of Ukraine by Russia.
Questions are also being asked about how far Samsung will go in pulling out of doing business in Russia all together especially as they have large investment in the Country.
Samsung generates $4.43 billion in sales per year in Russia.
Though this market makes up just 3% or so of its smartphone and appliance sales, the company operates a television production facility outside Moscow, they also have a major R&D lab Thats working on artificial intelligence.
Recently the Company decided to drop the Z from future versions of the Galaxy Fold they are also rebranding current models sold into European Countries so that the letter “Z” is removed.
At recent shareholder meeting CEO Han Jong-hee said in response to a question about Russia that the company “will monitor the situation and respond accordingly while minimizing the impact on our business.”
Samsung stopped shipping products to Russia in early March, shortly after the Russian invasion of Ukraine.
The South Korean Herald claims that the South Korean electronics maker has been less proactive than others in distancing itself from Russia, pointing to outside factors in its decisions, and has the fact that management have not made their position clear on the war itself.
This vagueness underscores its challenges as a multinational giant.
Samsung moved early into Russia after the fall of the Soviet Union, seeing promise in its wealth of natural resources. It spent heavily on marketing mobile phones, TVs and appliances, and the TV factory, started up in 2007, helped it amass further market share.
The Herald said, ‘It would be difficult for the company to leave just as it is recouping its investments’.
Competition from rapidly rising Chinese rivals likely is also a factor.
Samsung leads the Russian smartphone market with a 34% share and the Company is reluctant to hand this over to Chinese rivals such as Xiaomi who have 26% share.
Apple an archrival in most Countries only has 15% share in Russia according to IDC.
In TVs, competitors like TCL and Hisense look to chip away at Samsung by offering high-quality products at low prices.
Samsung is also a key supplier of TVs in Russia.
The failure to come out and denounce Russia could create problems for Samsung in the USA and with key investors claim observers.
The company is currently planning to build a semiconductor factory in Texas but could lose out on government incentives for the plant and risk its brand image in the U.S. by continuing to operate in Russia.
Samsung is not the only South Korean Company facing problems following the Russian invasion of Ukraine.
LG Electronics operates an appliance plant near Moscow and competes with Samsung for the top Russian market share in refrigerators, washing machines and TVs.
Russia accounts for 3% of LG Electronics’ total sales.
Back in March LG Electronics announced that they were suspending all shipments to Russia and will continue to keep a close watch on the situation as it unfolds.
“We are deeply concerned for the health and safety of all people, and LG remains committed to supporting humanitarian relief efforts” a Company statement said.
