Fair Electronics has set up an assembling plant for the world's number one mobile phone brand Samsung. The plant also produces refrigerators, televisions, air-conditioners and microwave ovens.
Fair Technology, a concern of Fair Group, has recently begun setting up an assembling plant for cars from the Korean automobile giant Hyundai.
Fair Group, which has not yet developed its own Research and Development (R&D), says the combination of global R&D is an opportunity to create skilled manpower and make big brands available in the country. The conglomerate believes it is a big chance to bring about major changes in the country's technology sector.
Fair Group Chairman Ruhul Alam Al Mahbub recently talked to The Business Standard about Samsung's R&D and his future plans.
Regarding manufacturing Samsung products in Bangladesh without its own R&D, the Fair Group chief said that 90% of mobile phones in the world are produced in China. But China has only one chip manufacturing company – Spectrum. Its total chip production is not more than 5%. Qualcomm, the largest chip manufacturer, is an American company, followed by MediaTek of Taiwan. The other big companies are American or Taiwan-based.
At this level of technology, no Chinese company has a big position. However, China is the world's top mobile producer. It has succeeded in bringing in R&D from abroad. "We also want to be a production hub."
"A good quality R&D requires huge investment. Samsung spends $2 billion a year on R&D. By using its R&D, we are able to provide quality products to consumers. Brands will not be developed by providing people with average quality products with poor R&D by investing less money. It will take a long time to make the company familiar and there will be no learning opportunity due to hurriedness. That is why we have adopted foreign R&D to do business.
We are slowly trying to bring in intermediary products from the company. We are telling them that we have done this for you. We have succeeded after taking it from them. We have started making some materials ourselves. We have thus initiated the change.
We are now assembling Hyundai cars. They told us to start making parts. They have told us to manufacture seats, belts and bumpers.
We are not making R&D now, but in future, they will tell us to make it too.
We are doing progressive manufacturing here. As the market is small, we are not yet in a position to cover the cost of R&D. We can do it once the volume increases. But we are re-engineering. We are also recruiting little by little. Once you will see, our huge RND team is ready," he said.
He added, "We could have made our own brand if we wanted to, but it would take a lot of time. Our people would not even get an opportunity to learn. When we manufacture any product of a big brand here, the company will have to share knowledge.
By gathering experiences here, our people one day will play a big role in manufacturing. We have just started reengineering. We will start manufacturing the remaining elements of televisions and monitors except for the display."
About Vietnam's progress in manufacturing, Ruhul Alam Al Mahbub said the government there has made an eight-lane road from the airport to the Samsung factory.
Describing the current situation, he said at present the market of consumer electronics in the country is about Tk30,000 crore. The 2022-23 and 2023-24 fiscal years will be a vibrant time for the consumer electronics market because urbanisation is happening at a very fast pace.
"If we calculate the total share of this market, our position will be second. However, in the individual category, Walton is the best for some brands such as refrigerators, while Gree and General are the best in air conditioners. On the other hand, we are the best in mobile while Samsung is the best foreign brand in the overall market."
Citing an example of how big the market can be, he said a family needs electronics products worth Tk2 lakh such as two mobile phones, a TV, a fridge, a washing machine, AC and an oven. If there are four crore families in the country, then the market should be Tk8 lakh crore. At some point in Bangladesh, all of them will come into this network. Bangladesh is the eighth-largest country in terms of population. It is also supposed to be the eighth-largest country in terms of market size.
Regarding the success of Samsung's products in the country, he said three factors have played a key role in the success. Samsung has partnered with affordable products within the reach of people, strengthened the distributor network, and "we have gained customer confidence through the establishment of Samsung stores."
The government has encouraged the manufacturing of electronics products such as mobile phones, by enacting production-friendly policies and providing tax holidays. Following Samsung, many global brands are setting up factories here. "Now we dream of mobile phone exports too. Together we want to build a technology-friendly industry."