Samsung poised to benefit from virus woes afflicting rivals

Samsung is better positioned to weather the virus fallout than its formidable rivals such as Huawei and Apple. (Reuters)
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Updated 18 February 2020

Samsung poised to benefit from virus woes afflicting rivals

  • “Samsung does not say it publicly. But it is relieved.”

SEOUL: Samsung Electronics stands to be a major beneficiary of the China production problems announced by rival Apple Inc on Monday, reaping the rewards of a decade-long bet on low-cost smartphone manufacturing in Vietnam.

Half of Samsung’s smartphones are now made in Vietnam, where the coronavirus that has crippled the China operations of Apple and many other firms has so far had only a limited impact on its production.

Apple said on Monday it would not meet its revenue guidance for the March quarter due to the coronavirus impact on both production and sales in China, where most iPhones are made. Chinese smartphone maker Xiaomi Corp last week also flagged a hit to its March quarter sales.

Huawei, another major Samsung rival, has not announced any production problems, but Samsung insiders, analysts and suppliers expect it will also be hit hard due to its heavy reliance on Chinese manufacturing and parts. Many Chinese and foreign firms have begun to re-open China factories that were idled for weeks, but shortages of workers and other problems have in many cases kept output to a minimum.

Samsung has also largely ceded the China market to its rivals in recent years, meaning it won’t suffer from the store closures and drop in demand that is hitting Apple and others.

BACKGROUND

5G — Before the virus, the smartphone market had been expected to end two consecutive years of falls due to smartphones running on faster 5G wireless networks. But the outbreak will dampen hopes of a rebound, with global shipments likely to record another decline.

“Samsung is better positioned to weather the virus fallout than its formidable rivals such as Huawei and Apple,” a person with knowledge of Samsung’s supply chain said.

“The virus exposed China risks. We feel fortunate that we were able to escape the risks,” he said.

Another person familiar with Samsung’s thinking told Reuters: “Samsung does not say it publicly. But it is relieved.”

Still, two sources familiar with Samsung’s Vietnam operations cautioned that should the virus outbreak be prolonged, Samsung would feel the impact, as the company sources many components from China.

Problems with cross-border shipments also cropped up in the early phases of the virus outbreak as Vietnam imposed stricter border controls, according to Hong Sun, vice chairman of Korea Chamber of Business in Vietnam. The issues have since been resolved, Sun said, but risks remain if Chinese parts suppliers cannot get back to work.

Samsung also relies on Chinese contract manufacturers for some low-end models.

In a statement, the company said: “We are making our best effort to minimize any impact on our operations.”


Bayut and Dubizzle fire M&A starting pistol

Updated 02 June 2020

Bayut and Dubizzle fire M&A starting pistol

  • The two owner companies will also run a $150 million investment round
  • EMGP will continue operating both Bayut and Dubizzle in the UAE

LONDON: The owners of Dubai-based listings sites Dubizzle and Bayut announced the merger of their MENA and South Asia operations as the regional property sector comes under pressure.

Dubai-based Emerging Markets Property Group (EMPG) and OLX Group made the disclosure in a statement carried by the UAE-based WAM news agency website.

The agreement includes a 550 million dirhams ($150 million) investment round, led by existing EMPG shareholders and OLX group. OLX has become EMPG’s largest single shareholder with 39 percent of shares, the statement said.

Both sites are known for their extensive listings in the real estate sector which has come under renewed pressure in recent months because of the coronavirus pandemic.

“This merger of EMPG and OLX will allow us to better serve our customers, given that both operate brands with a strong following and will allow us to leverage existing tech and data to paint a more accurate picture of the state of affairs in the real estate industry across the region,” said Haider Ali Khan, the head of EMPG — MENA . “At the same time, we will be making significant technology investments to provide more value to all users of property, automotive and other segments of the Dubizzle and OLX platforms.”

Merger and acquisition (M&A) activity is expected to accelerate this year as companies facing disruption from the coronavirus pandemic seek to cut costs and adapt to a rapidly changing marketplace.

Ali Maabereh, head of mergers and acquisition (M&A) at KMPG in Saudi Arabia predicted M&A activity will increase in GCC countries large corporates seek capital injections to satisfy working capital needs.

“The current pandemic is creating a lot of uncertainties and contradictions in what to expect after the dust settles. The expected key impacts on companies are shortages of liquidity and working capital requirements. Though companies might be running a healthy P&L, there will be significant pressure on working capital requirements,” he said.