The year 2020 should see Samsung Electronics reaching its target annual sales of USD 10 billion – this was the projection that BK Yoon, President and CEO of Consumer Electronics Business, Samsung Electronics, shared during the kickoff event of the company’s AC Forum 2015, held on October 28, in Seoul, South Korea.

Yoon’s announcement was part of a speech he delivered to officially launch Samsung’s 360 Cassette air conditioning unit, DVM Chiller, next generation DVM S 30HP and DVM S Eco 14HP.
The four new offerings, he said, would help achieve the goals the company has identified for itself.

Other than introducing its new range of cooling solutions, the company revealed several initiatives it intends to introduce to strengthen its presence in the global HVAC marketplace, including focusing on key markets in regions like the Middle East.

“In Korea, our market share is 50%,” said Charles Park, Vice President of the Sales and Marketing Team for Digital Appliances at Samsung, who addressed members of the press at an executive roundtable discussion. “We have been mainly serving the Korean domestic market. We haven’t really focused on countries overseas, because in order to do that in the air conditioning business, you need local infrastructure and significant investment – those were challenges. But our CEO has said that having invested and developed our technologies, there is now strong opportunity for us to expand our reach, especially since the overseas market for our DVM S range is growing quite rapidly. And that knowledge gives us confidence that our new products would also be successful.”

Going for the Gulf

While acknowledging that the company has only begun making inroads into the Gulf market in the early 2000s, despite being in the air conditioning business for 40 years, Park identified the region as among Samsung’s priority markets.

“Saudi Arabia, Turkey and the UAE, particularly Dubai and Abu Dhabi, are the geographical markets we are targeting in the Middle East,” said Park. “Of course, other markets are important, but considering market situations, we will focus on those first. As for the new products, they will be available in the region by the first quarter of next year. The region requires very different specifications because of its harsh environment, and so we have come up with versions of the products developed specifically to be able to withstand desert conditions.”

Apart from the region’s climate, Samsung is taking into account the Gulf’s distribution channels and regulations in the strategy it is adopting for the region. “Middle East markets have varying distribution characteristics and infrastructure, as well as varying regulations,” Park said. “We consider those in our distribution set-up in each market. We comply with the regulations and distribute our products through different subsidiaries.”

Also revealing that Samsung is bolstering its engagement with trade associations in the region and collaborating with developers, especially Dubai-based firms, he added: “We are maintaining communication, so that we can provide them with the most optimal solutions. And we are making use of our strengths, so that both the consumers and the partners can grow with us.”

Energy efficiency as a market draw

Among those strengths is Samsung’s commitment to energy efficiency, Park stated. Expanding on his colleague’s statement, Jemyung Moon, Senior Vice President of the R&D Team for Digital Appliances at Samsung, said: “In the Middle East, energy efficiency is important, and this is an area that we make much of an investment in, because we want to ensure high performance despite the extreme climate.”

Moon also pointed out that Samsung was prioritising eco-friendly solutions and technologies. “The first thing that we need to consider when we talk about eco-friendly manufacturing is the refrigerant,” he said. “In many countries, distribution of substances with high global warming potential (GWP) is either prohibited or limited, so we are doing our best to minimise the use of refrigerants with high GWP. We are also going to use micro-channel technologies in order to minimise refrigerant use itself.”

When asked to comment on the use of alternative refrigerants, Moon answered: “For now, we believe that R410A is sufficient for us, and we will continue to develop based on it. But with regard to R32, R290 and other alternative refrigerants, we will review their strengths and weaknesses.”

OPEX versus CAPEX

Another of Samsung’s strength, noted Park, is its focus on reducing operating costs. “There are many markets where price competition is very tough,” he pointed out. “If we make the same products as the rest, we will never get beyond that game. What we are doing is making products that offer end
users differentiated experiences and low operating costs. On the surface, our prices may seem higher than others’, but if you take into account all the ownership and user costs involved, our products will come out the better choice.”

Park explained that while the pricing scheme for Samsung’s new products has actually not been finalised, the company will most likely look at higher price points. “We have not decided on specific prices, but we think that the benefits of our products, compared to those of conventional units, are significant enough that the premium price – if added – will still be attractive,” he said.

This approach, he elaborated, will be even more evident in the way that Samsung intends to perform in one of its other target markets – India. “From our perspective, India has huge potential,” said Park. “Currently, it is predominantly a low-end market. At the same time, however, we are seeing a high-end segment forming quite rapidly. So, our basic strategy is not to compete with brands that are already targeting the low-end segment. We will go for the high-end instead, because they will recognise the premium for the type of solutions that we offer. When it comes to price, it should not only be a CAPEX issue. We also need to look at the operating costs, because the equipment is designed for long-term use.”
Plans for 2016

In addition to India and the Middle East, Samsung has identified Brazil and the UK as two other markets it is eyeing, Park said, revealing that 2016 will see the company staging road shows in cities like Mumbai, Rio and Sao Paulo, as part of its plan to further its footprint in overseas HVAC communities and as part of its AC Forum, which will continue until the first half of next year.

The Forum, according to the company, will make its way to 117 cities in 50 markets, and will involve the participation of over 9,000 global partners and media practitioners.

(The writer is the Assistant Editor of Climate Control Middle East.)

[Editor’s note: The journalist travelled to South Korea for the Forum, on the invitation of Samsung Electronics.]