Samsung Electronics has put an end to months of industry speculation by making a formal announcement that it will indeed be opening a manufacturing plant in Durban’s Dube Trade Port, at which it will make televisions for the local consumer market.
The company has committed to a total investment totalling US$20 million through 2018, and expects to have the new facility up and running by the end of this year.
Matthew Thackrah, deputy managing director of Samsung Electronics South Africa, said in a press statement, “This project is the result of close collaboration between Samsung and the South African authorities at national and provincial level.”
While Samsung is adamant that thorough feasibility studies and discussions with local authorities point to the promise of job opportunities and the development of skilled and unskilled labour in KwaZulu-Natal, several established South African electronics manufacturers say they are set to lose big at the expense of the new plant.
Altech UEC, Vektronix and Anyview Technologies, all of which are currently contracted to manufacture Samsung TVs, have reportedly submitted a letter to dti minister, Rob Davies, making the point that this development will have negative effects not only on indigenous manufacturing but on a larger economic scale as well.
Their objection is twofold: firstly, that Dube Trade Port, as one of SA’s new ‘special economic zones,’ will shield Samsung from the typical corporate tax rate of around 28% and instead charge it only 15%, which gives it a competitive advantage at the same time as it short-changes the country’s aggregate tax revenues; and secondly, that the job cuts that will result from the withdrawal of Samsung’s contract business with these three manufacturers will outweigh the number of new jobs the plant will create.
The news is particularly odious for Anyview as it claims its own investment to get its plant running up to Samsung’s standards has amounted to some R120 million, only to be given three months’ notice of the termination of its contract.
At the time of writing, Dataweek is awaiting responses to an enquiry from Samsung executives to clarify certain points which affect the South African electronics industry. These include to what extent the new facility will be a ‘manufacturing’ plant as opposed to an ‘assembly’ plant, and how much content (production machinery, components etc.) will be sourced locally. We will update readers as soon as we get an official response.
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