Samsung'S Adverse Market Layout Invested 1.5 Billion To Build Textile City In Chongqing

According to the Chongqing Municipal Foreign Trade and Economic Commission, the Samsung Group has reached a cooperation intention with Shandong Ruyi group. It will invest 21 million 500 thousand US dollars (about 150 million yuan) to build the western region in Chongqing Wanzhou area.

The city officially entered the textile industry.

In this regard, many industry insiders in an interview with reporters that Samsung Electronics as the core of SamSung group, the fourth quarter and the future Samsung Electronics is difficult to maintain profit growth, will affect the overall profitability of SamSung group, the layout of the textile industry is likely to widen the front line, to make up for its short presence in the electronics industry.

Samsung Electronics released its three quarter report in October 5th, showing that its operating profit in the third quarter amounted to US $7 billion 280 million, up nearly 100% from the same period last year, which is the highest profit margin created by the company in fourth consecutive quarters.

"The cost of raw materials and power continues to rise, and the consumer electronics market has been at a low level. The profit margins of most electronic companies have dropped sharply this year. At the same time, the cotton textile industry has been in a downturn since last year, and there has been a stop in many textile factories.

Zhang Maohua, an analyst at Anxin securities, commented.

Invest 150 million yuan to invest in Western Textile City

Chongqing foreign economic and Trade Commission's information shows that Samsung products and Shandong Ruyi group have reached a cooperation intention, will invest $21 million 500 thousand in Chongqing Wanzhou area to build western textile city.

Chongqing Provincial Foreign Economic and Trade Commission's foreign capital management division, director of Fu Xing, told the "daily economic news" reporter that the participation in the construction of the western textile city is the Samsung product of SamSung group. The two sides will set up Chongqing Three Gorges Technology Co., Ltd. in Wanzhou District, with a registered capital of 443 million 750 thousand yuan, and Samsung's products invested 21 million 500 thousand yuan (about 150 million yuan), mainly engaged in the production and sale of textile products.

It is understood that SamSung group includes Samsung Electronics, Samsung products, Samsung life, Samsung airlines and so on. Its business involves many fields such as electronics, finance, machinery, construction and so on. Samsung products is the largest foreign trade enterprise in Korea.

In fact, as early as April this year, Samsung Group has revealed in the media that it will join hands with Shandong Ruyi and Itou Tada Commercial Co., Ltd. in Japan to build the western textile city in Chongqing. The project includes 250 thousand spindles compact spinning project, 50 million meter Ruyi spun fabric project and 10 million sets of Ruyi spinning.

After the project is completed, it will form the largest textile industrial chain base in the western region, which can achieve sales revenue of 10 billion yuan.

The director of the Chongqing foreign economic and Trade Commission's foreign investment management office, Fu Xing, said that Samsung's participation in the first phase of the western textile city, the total investment of the project was 5 billion yuan, and Samsung accounted for about 26% of investment funds.

In addition, Samsung's products are not for the first time in the textile and garment industry. Its Shanghai textile department has been established for more than 10 years, mainly engaged in the import of textile chemical fiber raw materials and the export of fabrics and gauze, and the re export business.

Excavating more profit sources or main reasons

Although the main investor is Samsung's products, many industry insiders believe that in the context of the declining profit margins of the global electronics industry, the Samsung Group has widened the front line and excavated more profit sources or main reasons.

"Daily economic news" reporter learned that, affected by the international environment, the global consumer electronics market has been low this year, leading to a sharp decline in product prices. At the same time, in the context of high cost of raw materials and power, the profitability of enterprises has also been declining.

The declining profit margins in the electronics industry are also reflected in the earnings of major enterprises.

On the evening of October 18th, the third quarter earnings report released by NOKIA showed that its losses amounted to US $1 billion 270 million, while Google's three quarter earnings report released in the early morning of October 19th also showed that Motorola's mobile subscription continued to lose 527 million US dollars in the three quarter.

Zhang Maohua, an analyst at Anxin securities, believes that Samsung's operating profit in the third quarter of this year has increased by nearly $100%, even though it has benefited from the increase in sales of the mobile sector. It is very difficult for Samsung to maintain the trend of profit growth in the fourth quarter of the year, "he said." the profit in the first quarter of this year is nearly $100%, "he said.

Zhang Maohua also pointed out that the long-term consumption of Samsung and Apple Corp in the patent war, coupled with its profit structure is not reasonable, these factors will impede the continued growth of profits.

According to iSuppli, a global market research firm, Samsung's share of the global memory chip market, storage chip market and flash market is currently the world's largest, and storage chips account for a large share of its profits.

"The biggest demand for memory, the PC market, has begun to slack. In the third quarter, Samsung's price of DRAM chips for computers and mobile phones dropped by 14%, and contract prices have bottomed out. At the same time, apple, one of Samsung's biggest customers, is cutting its dependence on them, which is hindering its profit growth."

Zhang Maohua said.

Founder of the securities analyst Gan Xiang also believes that in the combined role of these factors, the Samsung Group's textile industry in Chongqing can, to a certain extent, widen the front line and tap more sources of profits to ensure that profits continue to grow.

Textile industry "investment in winter" or trapped

Chongqing Cotton Textile Industry Association said that the whole domestic textile and garment industry is experiencing the baptism of cold winter. "Samsung's action is more bold, the textile and garment industry is a hot potato, and few companies will choose to enter this time."

The reporter learned that a Chinese Cotton Textile Industry Association's survey of hundreds of key cotton textile enterprises showed that at present, at least 30% of the enterprises above Designated Size had already limited production, and more than half of the SMEs had to stop production because of the high cost of using cotton. Most enterprises lost more than 2000 yuan per ton of pure cotton yarn, and the new construction projects continued negative growth, which fell by 9.4% in 1~7 months.

It is also understood that Shandong Ruyi ranks among the top 10 in the national textile enterprises, and owns the largest domestic wool textile industry chain and cotton textile dyeing and printing industry chain.

As early as 2005, Shandong opened the Chongqing market and set up a textile base in Wanzhou. At present, it has invested 1 billion 600 million yuan and exported the "Chongqing made" clothing products to the domestic and foreign markets.

According to public information, the western textile city, which is invested by Samsung, will become a textile commodity trading center in Sichuan, Shanxi, Hubei, Hunan and Guizhou provinces. The annual output value will reach 30 billion yuan, while industry analysts such as Gan Xiang have expressed concern to reporters.

"The good news is that the recent winter in textile industry is showing signs of warming."

The above Chongqing cotton textile industry personage introduces, benefit from seasonal change, autumn and winter clothes are listed in large quantities, August and September China's textile and clothing

The volume has increased.

The celebrities added, "however, the situation of rising upstream costs and the continued downturn in consumption has not been improved. This recovery should not last long and the cold winter will continue."