Samsung Electronics and LG Electronics to Construct Factories in the U.S. in Order to Avoid Economic Pressure from the U.S Government

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Samsung Electronics invested about $300 million and is constructing production facility in Newberry, South Carolina. Previously LG Electronics also announced its plan to construct its factories in the U.S. These are their strategic moves to expand their dominance in American market, which is the biggest market in the world, by avoiding economic pressure that is becoming stronger ever since establishment of President Trump’s government.

According to industries on the 25th, Samsung Electronics is first going to look at Newberry, South Carolina as a place to construct its factories for home appliances. Newberry is a place that is located 241 kilometers away from South Carolina’s Charleston Port.

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Wall Street Journal (WSJ) also reported same information. WSJ reported that Samsung Electronics is currently looking at an engine production plant that is emptied by an American heavy equipment manufacturer called ‘Caterpillar’ in order to construct its factory there and that it will be making an announcement shortly. Samsung Electronics invested about $300 million and this will create about 500 employments.

This new factory will produce oven ranges that are being produced in Mexico and it is heard that production will start in 2018.

Some predict that announcement will be made next week when President Moon Jae-in of South Korea is visiting the U.S. to meet with President Trump regarding their first South Korea-U.S. summit.

“Although we are currently looking from many different angles in order construct factories in the U.S., we have not finalized on anything yet.” said a representative for Samsung Electronics. “However Newberry is the likely place where we will build our factories.”

Previously LG Electronics invested about $250 million into Clarksville, Tennessee in March and announced that it will construct production plant for washing machines by first half of 2019.

Reasons why Samsung Electronics and LG Electronics are making investments to construct factories in the U.S. is to avoid an economic pressure that is becoming stronger ever since establishment of President Trump’s government. President Trump’s government has been very active in luring foreign companies to build production facilities in the U.S. in order to create employments. In early this year when Samsung Electronics’ investment plan was announced, President Trump said “Thank you, Samsung!” on his Twitter. Also President Trump’s government has been increasing level of pressure by mentioning border tax on products that are imported and produced from nearby countries such as Mexico. Fact that American companies such as Whirlpool and others are continuously making anti-dumping suits is also a burden.

It is expected that these large direct investments made by Samsung Electronics and LG Electronics are going to improve trade relationship between two countries. Some say that Samsung Electronics will be able to even expand production facilities from Dacor that was acquired by Samsung Electronics last year.

In a long-term, they can increase their competitive edge in American market. By preparing production base in the U.S., they can reduce distribution cost and transportation time and they won’t have to pay tariff.

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“Although increase in personnel expense is expected due amount of investment and high wage, they will be able to offset increase in personnel expense through reduction in distribution cost and tariff.” said a representative for an electronics industry. “Rather than making investments due to external pressure, they should be able to expand their production and sales that are optimized for the U.S.”

Staff Reporter Kwon, Keonho | [email protected]

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