MOU with Samsung Opens Door for CSC in Vietnam White Goods Market

China Steel Sumikin Vietnam Joint Stock Company (CSVC) plans to partner with Korea's Samsung in manufacturing white goods in Vietnam under a memorandum signed recently between the two sides. The MOU paves the way for China Steel Corp. (CSC), the top shareholder of CSVC, to tap the Korean branded vendor's supply chain in the near future.

Industry insiders report that Samsung suggested the idea of joining hands with CSVC to explore the emerging market after investing US$1.4 billion in setting up a new household appliance factory in Ho Chi Minh City. The plant will make washing machines, air conditioners and refrigerators. It is scheduled to kick off mass production in Q3, 2015, with planned annual output of up to six million units in 2020. This is Samsung's 13th major overseas investment.

CSVC is a joint venture between CSC and Japan's Sumitomo Metal Industries, Ltd. and other investors. The US$1.15 billion venture is CSC's largest overseas investment. The steel producer hopes the venture will help it to build a strong foothold in the growing automobile and electronic appliance market in the ASEAN (Association of Southeast Asian Nations) bloc.

Under the MOU, CSVC will supply steel materials to the Samsung factory. The venture is expected to add considerable growth momentum to CSC's performance from late 2015, when CSVC will boost annual output of pickled and oiled steel coils, cold-rolled steels, electrical steel coils and hot-dip zinc-coated steel coils to one million tonnes.

CSVC has encouraged Samsung to outsource higher-end materials such as titanium alloys and aluminum from CSC. If Samsung agrees, it would help to cushion CSC from the impact of the Sino-Korea free trade agreement, a pact that is expected to hit Taiwanese steelmakers' sales in China.

CSVC has started supplying galvanized and electromagnetic steel sheets and other materials to Samsung for trial production of white goods at the latter's new factory. The Korean firm has shown a strong interest in making CSVC its biggest material supplier in the ASEAN bloc.

China Steel Corp. (CSC), Taiwan's largest steelmaker by size, posted better-than-expected performance in October, helped mainly by improved operational efficiency and low material costs. The company posted consolidated revenue of NT$30.688 billion (US$1.02 billion) in October, down 1% month-on-month (MoM) but up3.35% year-on-year (YoY), with operating profits of NT$3.312 billion (US$110.4 million), rising 17% MoM. The month's pretax profits reached NT$2.941 billion (US$98.03 million), edging down by 1% MoM but climbing 30.65% YoY.

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