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January 29, 2013

Samsung to Make $1.7B Investment into its Chinese Operations

Xinhua news agency announced on Sunday that South Korean electronics company, Samsung, has made plans to invest $1.7 billion in its Kunshan holdings, located west of Shanghai, China and originally set up in 2008.

The investment will cover both the expansion and the outfitting costs of Samsung’s operations in the manufacturing hub.

The $1.7 billion will likely be used to build a workshops, to lease or purchase equipment and to begin chip carrier research at a variety of institutes operated by the company’s Electro-Mechanics division – all according to a Xinhua source in Kunshan municipal government.

Samsung’s manufacturing network includes over 250 suppliers in China and this investment plan is thought to be an attempt by the handset, memory chip and television maker to consolidate its control over those suppliers, as well as to diversify its client-base.

China’s manufacturing industry is enjoying rapid growth at the moment, with low-margin producers of plastics and textiles being overtaken by larger-scale electronics manufacturers.

On top of the investment announced on Sunday, Samsung is already in the process of building a $7-billion chip complex in the industrial Chinese city of Xi’an, Yahoo reports. With Samsung expanding in this way, a number of labor activists have begun scrutinizing its workshop practices more closely.

These include groups more accustomed to scrutinizing its rival manufacturer, Foxconn, who were found to have hired underage works in 2012 and were ordered to conduct a number of internal audits as a result.

Trading as Hon Hai Precision Industry Co., Ltd., Foxconn is a global Taiwanese manufacturer and designer of electronics and electronic components. Based in Tucheng, Taiwan, Foxconn is measured as the largest electronics contract manufacturer, according to revenue.

Its products include Kindle e-readers, Playstation 3 and Wii U consoles, as well as iPad and iPhone mobile devices.

Edited by Braden Becker

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