Samsung China aims to buy supplies worth US$18.5 billion in the country this year, up from US$15.3 billion in 2005.

China has become the second-largest market and manufacturing base for the South Korean firm, which faces tough competition in the Chinese market.

The top South Korean conglomerate has already moved its international purchasing centre from Hong Kong to Shanghai, the firm said.

The centre will co-ordinate 10 separate purchasing offices in China.

"Price wars in China are bloody and the key to our success lies in a competitive advantage in terms of cost. We also need a bigger procurement network," said Keun-hee Park, president of Samsung China.

Samsung China, one of the most successful multinationals in the world's most populous market, recorded total sales of US$25.3 billion last year, including local sales of US$17.1 billion.

Its exports from China also set a new record of US$9.8 billion, more than four times the 2001 figure.

"To survive in the market, we must respond quickly to changes and revolutionize our business process and systems," said Park.

At present, Samsung China has about 4,600 suppliers. It has just launched a new strategy to upgrade its sourcing, supply chain management and its relationship with suppliers.

It aims to build up suppliers in strategic production areas, such as mobile handsets and big-screen TVs.

It is also expected to open a website next month to improve co-operation with suppliers, which will be able to conduct training and technological support.

Samsung is also looking at other ways to attract good suppliers to the firm.

LG Electronics, the fourth-largest global mobile phone maker after Nokia, Motorola and Samsung Electronics, was a second-tier player in China, but has just launched its popular model KG90.

This has beaten Samsung's phones in the South Korean market over the past three months. LG has vowed to replicate this success in China, aiming to sell 1 million units of the model this year.

Meanwhile, Japanese firm Sony cited statistics from the market intelligence firm Gfk that it is No 1 in the market for LCD TVs above 23 inches. Samsung also has a strong interest in this area.

(China Daily 04/22/2006 page5)

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