Transcript SEC Presentation

The Role of Industry in Korea’s
Economic Development :
The Case of Samsung Electronics
Contents
Overview
Key factors of success
Contribution to Korean economy
Tax benefits for business
Tax issues in Africa
2
Overview
3
History
1972
1992
Production of B/W TV sets began
Company ranked world’s top DRAM supplier
1969
1980
1995
Company established
Korea Telecommunications
Corp. acquired
TFT-LCD mass production began
1974
1988
1994
Wafer fabrication started
Samsung Semiconductor &
Telecommunications merged with
Samsung Electronics Co.
256Mb DRAM
developed
1996
CDMA cellular services
commercialized
1995 - 2009 SAMSUNG. All rights reserved.
| 4
History
2004
 S-LCD Corp., LCD joint venture with Sony established
 World’s 1st to develop and demonstrate Mobile WiMAX
2002
2006
Production using 300mm wafer and
90nm processing technology started
1997
2003
Worldwide Olympic
Partner contract signed
Company became leader
in flash memory
 World’s 1st Blu-ray
Player launched
 World’s 1st 50nm
1Gb DDR2 DRAM
developed
1999
2005
 World’s 1st to offer full
line-up of digital TVs
 Developed watch phone,
MP3 phone and TV phone
 World’s 1st Satellite
and Terrestrial DMB
terminals launched
 World’s 1st
102”PDP TV,
82”LCD TV,
and 71” DLP™ TV
developed
2007
World’s 1st
64Gb NAND
flash memory
developed
2009 ~ 2010
 Reorganized into stand-alone
businesses
 Acquired Samsung Digital
Imaging Co.
1995 - 2009 SAMSUNG. All rights reserved.
| 5
Global Network
66 Countries
June 2010
Manufacturing Subsidiaries
Sales Subsidiaries
33
50
Distribution Centers
Design Centers
R&D Centers
Branch Offices and Other
Total Facilities and Offices
2
7
20
81
193
1995 - 2009 SAMSUNG. All rights reserved.
| 6
Samsung Today
Leader in semiconductor,
telecommunication and digital
convergence technologies
193 offices and facilities
in 66 countries and
174,000 employees worldwide
Named one of World’s 50
Most Admired Companies
by Fortune
Magazine
Ranked 4th globally and 1st
in Asia among corporations
on the Carbon Disclosure
Leadership Index
Selected for the Dow Jones
Sustainability Index
Worldwide Olympic
Partner since 1997
Second biggest US
patent winner in 2009 (IFI)
19th in
BusinessWeek/Interbrand’s
100 Best Global Brands
Net Sales (2009): US$116.8 billion
Net Income (2009): US$8.3 billion
1995 - 2009 SAMSUNG. All rights reserved.
| 7
Company Organization
CEO
Geesung Choi
COO
CFO
Jay Y. Lee
Ju-Hwa Yoon
VISUAL
DISPLAY
MOBILE
COMMUNICATIONS
TELECOM
SYSTEMS
IT SOLUTIONS
DIGITAL
APPLIANCES
SEMICONDUCTOR
Boo-Keun Yoon
Youngki Kim
Seongwoo Nam
Jongkyun Shin
Changwan Hong
Oh-Hyun Kwon
LCD
Wonkie Chang
DIGITAL
IMAGING
Hyunho Chung
1995 - 2009 SAMSUNG. All rights reserved.
| 8
Business Units
Visual
Display
Mobile
Communications
Telecom
Systems
IT
Solutions
Digital
Appliances
Semiconductor
LCD
Digital
LCD
Imaging
1995 - 2009 SAMSUNG. All rights reserved.
| 9
Financial Performance
Strong revenue growth
Revenue
Net Income
(Consolidated basis)
(Consolidated basis)
(Billion US Dollars)
(Billion US Dollars)
$8.5
$116.8
$7.5
$105.0
$8.3
$7.9
$96.5
$92.0
$79.6
$4.4
2005
2006
2007
2008
2009
※ Won to Dollar Conversions at End Year Exchange Rate
2005
2006
2007
2008
2009
1995 - 2009 SAMSUNG. All rights reserved.
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Samsung in Africa
11
History of Samsung in Africa
End 2011
2002
2006
Kenya branch
Nigeria branch
200 brand shops
400 Shop-in-shop
1994
2010
SSA established
2010
Senegal/Angola office
Sudan office
1995
2005
2010
2010
Africa RHQ
2009
2011
SE West Africa Marketing Subsidiary
Ivory Coast/Ghana being
registered
1995 - 2009 SAMSUNG. All rights reserved.
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Market Leadership (SA) – End User
2008
M/S
Rank
M/S
2010
Rank
M/S
Rank
25.7%
1
33.3%
1
35.5%
1
26.3%
1
33.0%
1
33.1%
1
-
92.7%
1
60.9%
1
25.3%
2
32.3%
2
27.2%
2
SBS REF
35.8%
1
39.2%
1
44.5%
1
Laser PRT/
MFP(A4)
19.9%
2
31.7%
2
36.0%
1
FPTV Total
LCD TV
-
2009
LED TV
Handset
-
※ Source : TV (Display Search), Monitor (IDC), Printer (IDC), Handset (Strategy Analytics), (WiMAX) ABI Research
※ Calculated on Quantity basis where applicable
1995 - 2009 SAMSUNG. All rights reserved.
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Samsung Africa CSR
Programs, Products and Services that are Built in Africa, for Africa, by Africa
Social Contribution
1.
2.
3.
4.
5.
6.
Medical Support
and building of
classrooms in
Senegal
Samsung Medical
Check-up
Anti-Fake
Campaign
Ethiopia Samsung
Park
Free service
campaign
Nigeria Employee
Volunteer program
to benefit orphans
Sports and Recreation
Education
1.
1.
2.
3.
4.
5.
6.
7.
Kenya Athletics
sponsorship
Angola Africa Cup of
Nations
Zambia Olympic
Youth Development
Centre
Confederation of
Africa Athletics
Sponsorship
Namibia Youth
Athletics sponsorship
Ethiopia Youth
Athletics sponsorship
International
Athletics Association
Federation
2.
3.
Ethiopia Rural Village
Vocational Centre
Samsung Schoolbased Internet
Centres
Samsung Electronics
Engineering
Academy
Business offering alignment
1.
2.
Samsung Africa R&D
Centres
Samsung Content &
Applications
development Hubs
1995 - 2009 SAMSUNG. All rights reserved.
Key factors of success
15
New Management Transformation
Transformation into leading global brand began with New Management
Declaration in Frankfurt in 1993
Understanding Current Reality
Change Begins with Me
Guiding Principles of Samsung
One Direction
Quality Management
Globalization
A First-class Company in 21C
1995 - 2009 SAMSUNG. All rights reserved.
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Technological Competitiveness
Innovating technologies by sustaining investment in R&D
Investment in R&D
R&D Commitment
(Billion US Dollars)
(as a % of parent company sales)
$7.5
$6.0
$6.2
$5.5
$5.3
2005
$6.3
2006
2007
2008
2009
1995 - 2009 SAMSUNG. All rights reserved.
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Government policies
Support for facility investment
- Tax deduction on facility investment
- Massive investment in semiconductor lines supported by tax benefits
Facilitating R&D
- Tax deduction on R&D expenses and investment
- Enables Samsung to maintain a lead in cutting-edge technology
Benefits for foreign investment
- Various tax exemptions on foreign investment companies
- Tax benefits for the Samsung-Sony LCD JV has been a key success factor
1995 - 2009 SAMSUNG. All rights reserved.
|
Contribution to Korean economy
19
Overall Economy
Samsung’s contribution to the local economy
Employment
(thousand)
Export
(billion$)
Market
Capitalization
(trillion Won)
2009
2008
2007
National Total
10,725
10,658
10,180
Samsung (%)
85 (0.8)
84 (0.8)
85 (0.8)
National Total
363.5
422.0
371.5
Samsung (%)
59.3 (14.1)
54.7 (13.0)
55.0 (14.8)
National Total
882
577
952
Samsung (%)
118 (13.4)
66 (11.4)
82 (8.6)
1995 - 2009 SAMSUNG. All rights reserved.
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National Tax Revenue
Samsung pays over 2% of total national tax revenue
(Trillion Won)
2009
Tax in Total
National
Tax
Revenue
164.5
(%)
Corporate
Tax
(%)
Samsung
National
Tax
Revenue
3.2
167.3
2.0
35.3
(%)
VAT
2008
0.5
1.4
3.0
Samsung
National
Tax
Revenue
3.8
161.5
2.3
39.1
1.4
47.0
2007
1.1
1.5
3.5
Samsung
National
Tax
Revenue
Samsung
3.2
138.0
2.7
2.0
35.4
2.7
43.8
2006
1.0
2.0
29.4
2.7
40.9
1.3
3.2
0.6
2.0
38.1
1.2
3.1
1995 - 2009 SAMSUNG. All rights reserved.
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National Brand Value
Korea ranked 18th in national brand value in 2010 among 50 countries
- Jumped one ranking from 2009
- Economy and business ranking at 14th
* Source : SERI(Samsung Economic Research Institute) and PCNB(Presidential Council on Nation Branding)
Samsung’s enhanced brand awareness worldwide boosted national value
- Samsung ranked 19th among global companies in 2010
- Remarkable growth from ranking 25th in 2003
* Source : Business Week (Interbrand)
1995 - 2009 SAMSUNG. All rights reserved.
Tax policies for business
23
Tax deduction on investment
Tax deduction on facility investment and R&D expenses
(M$)
1995 - 2009 SAMSUNG. All rights reserved.
| 24
Falling corporate tax rates
Corporate taxes has been lowered below OECD average
(%)
Lower than OECD average
1995 - 2009 SAMSUNG. All rights reserved.
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Others
Efficient taxation system
- Merged 8 indirect taxes into VAT and Special Consumption Tax
- Introduced Digital Tax Invoice for taxpayers’ convenience
VAT exemption on export goods and services (Zero Tax Rate)
- Samsung receives net refund of VAT every year
(Trillion Won)
2009
2008
2007
2006
VAT payment
1.4
1.5
1.3
1.2
VAT refund
1.6
1.9
1.7
2.1
Net refund
0.2
0.4
0.4
0.9
1995 - 2009 SAMSUNG. All rights reserved.
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Tax issues in Africa
27
Tax Policy & Administration Issues
Divergent Tax Laws across countries
- Source/ Resident based
- Different Withholding taxes structures
Variant Customs & Excise Laws/ taxes
- Manual process
- Grey vs white imports
Tax incentives dissimilar
- Manufacturing
- Services
- R &D incentives
- Call Centres
1995 - 2009 SAMSUNG. All rights reserved.
28
Tax Policy & Administration Issues
Law based on different “colonial” past
- English vs Portuguese vs French, etc.
Double Taxation Agreements
- Not uniform
- Coverage not sufficient
Foreign Exchange Controls
- Repatriation of funds
- Availability of Forex
1995 - 2009 SAMSUNG. All rights reserved.
29
Suggestions for Enhancements
Standardise Structure of Tax Acts across Africa
Have all relevant laws and administration available in “Business English”.
Lower Corporate Taxes
Simplify Indirect Taxes to VAT as primary tax
Introduce digital tax administration (SA example)
Share info across different Tax Jurisdictions
- Assists with registration/ compliance
Standardise DTA (Have all jurisdictions in Africa covered)
Make customs processes quicker (with less human intervention)
Create more Common Customs
1995 - 2009 SAMSUNG. All rights reserved.
30
Thank you