Two years ago, Samsung mobile sets sold in Bangladesh were manufactured in China, Vietnam, or South Korea. But now Bangladesh is not only making mobile sets of the South Korean electronics brand but also exporting them.
The company, Fair Group, that made the export possible is going to take the business one step farther by beginning production of motherboards to make mobile phones even cheaper.
Until now, motherboards have been imported for the phones produced at the factory of Fair Group in Narsingdi's Shibpur. A plant set up at a cost of around Tk60 crore in the factory premises will soon start operation to manufacture motherboards.
In a recent interview with The Business Standard, Ruhul Alam Al Mahbub, chairman of the Group, said the whole plant was ready, and the company had requested the National Board of Revenue to inspect the plant and give its approval for the production to begin.
"We have taken preparations to launch mobile phones made with motherboards manufactured in the plant from mid-January," he said.
The machinery for making motherboards of refrigerators and television sets has also been installed at the plant. Apart from mobile sets, these two Samsung products will be manufactured with locally-made motherboards, bringing down production costs and prices in the local market.
The company has also finalised a plan to build a plant to manufacture Samsung washing machines.
Alam said locally-made Samsung washing machines would be available in the country this year.
Fair Group, the sole distributor of another South Korean automobile giant Hyundai Motors, is also going to set up a Hyundai passenger car assembling plant in Bangladesh. It will be built at the hi-tech park in Kaliakair.
Export of Bangladesh-made Samsung products
Recently, Fair Group exported Samsung mobile sets and refrigerators to the United Arab Emirates for the first time on a small scale.
Mobile devices, including Galaxy Note 20 Ultra and 5G flagship sets like Note 20, are now being made at the Shibpur factory.
"Some Samsung handsets were exported to Dubai on a trial basis. We got good response from there," Alam said.
The company also received positive feedback from Dubai on exported Samsung refrigerators.
Samsung products assembled at the Fair Group's plant were previously allowed to be marketed in Bangladesh only. Now the company's production capacity has increased and an approval has been given for exporting its products.
Fair Group sees great potential in export
Alam said India's seven sister states, in addition to the neighbouring Nepal, Bhutan, and Sri Lanka could be a big market for Samsung products manufactured in Bangladesh.
Large-scale exports are possible if Bangladesh gets duty-free access to those markets for electronic goods under bilateral trade deals like the South Asian Free Trade Area (Safta) agreement.
Fair Group is holding discussions with the Ministry of Commerce to get its products on the list of duty-free export items.
"Vietnam exports Samsung products worth $55-$60 billion every year. If the environment of doing business can be made easier in Bangladesh, it will be possible to export Samsung products worth this amount," Alam said.
He is also optimistic about Samsung's direct investment in Bangladesh.
The company chairman said Samsung representatives had already discussed the matter with Fair Group. He thinks Bangladesh should have a long-term tax policy to attract foreign investment.
"When we set up the mobile manufacturing plant, there was no VAT on handsets. A year later as we started production, suddenly 15% VAT was imposed."
After a lot of negotiations with the ministries concerned, VAT was reduced to 5%. If tax and VAT are imposed this way, global brands will feel discouraged to invest in Bangladesh, Alam said.
Foreign investors should be provided with favourable policy support and infrastructure facilities, he said, adding that only cheap manpower was not enough to attract foreign investment.
Meanwhile, Fair Group is increasing its investment to meet the rising demand for Samsung products in and outside the country.
It has become the fastest growing business organisation in Bangladesh within 12 years of its inception by following the principles of "Fair Business Practices." In 2014, it became the national distributor of Samsung mobile phones.
In 2018, Samsung's Complete Knock Down mobile sets manufactured in the Shibpur plant were launched in the market. Before that, Samsung refrigerators came to the market. Fair Group started the production of television sets and air conditioners last year.
At present, three crore mobile sets are sold in the country annually. Of these, one crore are smartphones.
According to Fair Group, the annual demand for smartphones in the country will increase to two crore units in the next five years due to the widespread expansion of mobile internet, an increase in consumer income and growth in literacy.
The company wants to become strong in this sector with more investment in smartphone production.
It plans to bring Samsung no-frost refrigerators and TVs to the number one position in Bangladesh in the next three years. Manufacturing refrigerator parts is part of the plan.
Mohammed Mesbah Uddin, chief marketing officer of Fair Group, said more than 3,000 people were working at Fair Group.
Of them, 1,800 are employed in the factory. The rest work in offices, warehouses, and in sales.
Most of the people employed in the factory are high skilled engineers, Mesbah said. "The motherboard plant, which is to be launched soon, will employ about 50 high skilled engineers," he added.