Samsung opens world's biggest phone plant in India

Samsung Electronics opened the world’s largest mobile phone factory in India, in a win for Prime Minister Narendra Modi’s flagship programme to lure investors to manufacture in the South Asian nation.

The factory was inaugurated by Mr Modi and South Korean President Moon Jae-in during their visit to the facility in located at the outskirts of Delhi. This will double Samsung’s Noida unit capacity for mobile phones to 120 million units a year from 68 million units a year, it said. The phase-wise expansion will be completed by 2020.

Smartphone makers from Xiaomi to Oppo Mobiles are building factories in the world’s fastest-growing market for the product bolstering Mr Modi’s push to encourage overseas investors to “Make in India”. Asia’s third-largest economy attracted record foreign direct investment in the past year totalling $62 billion, including reinvestment.

“The opportunity is just massive," said Faisal Kawoosa, who heads new initiatives at researcher CMR. “Such a large facility will help Samsung cater to the huge demand in a country of 1.3 billion people where there are only 425 million smartphone users.

India’s smartphone market grew 14 per cent with total shipments of 124 million units in 2017, the fastest pace of growth among the top 20 markets, according to IDC. Demand for new phones is surging in India, helped in part by billionaire Mukesh Ambani offering $23 4G feature-phones, free voice services and cheap data plans. China’s Xiaomi said in April it will set up three more factories in India.

“We are aligned with government policies and will continue to seek their support to achieve our dream of making India a global export hub for mobile phones,” said HC Hong, chief executive for Samsung India.

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High iPhone prices can’t last forever

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The Samsung factory will make everything from low-end smartphones that cost under $100 to its flagship S9 model, according to the company. Earlier this year, China’s Xiaomi displaced Samsung from the number 1 smartphone spot in the country, breaking its long-held dominance.

Indians favour low-end smartphones priced at $250 or less, given the low average annual income of its people, according to Bloomberg Intelligence. That’s one reason why Apple has struggled to gain market share in India, with most iPhone models priced beyond $500, according to a Bloomberg Intelligence report earlier this month.

Last year, India overtook the US to become the world’s second-largest smartphone market after China. There will be 780 million connected smartphones in 2021, compared with 359 million in 2016, according to a study by Cisco Systems.

Formula Middle East Calendar (Formula Regional and Formula 4)

Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi

Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi

Round 3: February 7-9, Dubai Autodrome – Dubai

Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi

Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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The lowdown

Rating: 4/5

Various Artists
Habibi Funk: An Eclectic Selection Of Music From The Arab World (Habibi Funk)

If you go

The flights

There are direct flights from Dubai to Sofia with FlyDubai (www.flydubai.com) and Wizz Air (www.wizzair.com), from Dh1,164 and Dh822 return including taxes, respectively.

The trip

Plovdiv is 150km from Sofia, with an hourly bus service taking around 2 hours and costing $16 (Dh58). The Rhodopes can be reached from Sofia in between 2-4hours.

The trip was organised by Bulguides (www.bulguides.com), which organises guided trips throughout Bulgaria. Guiding, accommodation, food and transfers from Plovdiv to the mountains and back costs around 170 USD for a four-day, three-night trip.

UAE currency: the story behind the money in your pockets