“Overseas factories, domestic employment, and technological hollowing out: a case study of Samsung’s mobile phone business”

Keun Lee & Moosup Jung writes an important article on the cell phone business carried out by Samsung named “Overseas factories, domestic employment, and technological hollowing out: a case study of Samsung’s mobile phone business” which can be summarized in four sections. Firstly, Samsung’s division dealing in mobile phones saw an increment in terms of domestic jobs in spite of big factories being established abroad. Starting with 5950 employees in the year 2002, the number rose to 20,500 by 2012.

Secondly, Samsung was able to gain significant reduction in prices by subcontracting assembly to a Vietnam factory. The cost of labor among the overall added amount is observed to be about 42 percent in Korea’s Gumi. But, this percentage was observed to be only about 6.8 percent in the factory of Vietnam. In accordance to the difference in percentages of the two areas, the amount came to be about $5.7 per cell phone. While calculating the overall amount, this comes out to be $682 million in accordance to the significant price for number of cell phones generated annually i.e. 120 million.

Thirdly, with Samsung in the mobile phone scenario, the amount of job increments in relation to the increase of volumes came out to be greater than replacement influences of the workers from abroad. The domestic workers associated with the assembly lines were brought down to 150 between the years 2008 and 2012 and the combination of the workers of R&D and technical division came out to be greater than 4600.

Finally, in order to combat the scooping of technology, the main engineers and technicians of Samsung were confined in a distinct unit rather than getting them fired. This was done whenever the lines of assembly faced reduction or whenever establishment of lines took place abroad. The place for these main workers was the “Global Manufacturing Technology Center.” These workers proved to be the most efficient and the secret behind the success of the Samsung brand.


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