Seoul: South Korea’s largest business group Samsung announced plans Tuesday to invest $20.3 billion in healthcare and green energy over the next decade as it moves to diversify into new growth engines.
Lee Kun-Hee, chairman of group flagship Samsung Electronics, said it was time to seize the opportunity created by worldwide spending on sustainable energy.
The new plan “shows a shift in future business concepts to the environment, energy and health,” said spokesman Rhee In-Yong.
Samsung said the new businesses are expected to create around 45,000 jobs and generate 50 trillion won in annual revenue for affiliate companies by 2020.
It said its 23 trillion won ($20.3 billion) investment would focus on solar cells, rechargeable cells for hybrid electric vehicles, light emitting diode (LED) technologies, biopharmaceuticals and medical devices.
The group accounts for 20% of the country’s exports.
Samsung Electronics alone is the world’s largest maker of memory chips and flat screen televisions and the second largest mobile phone manufacturer.
But Lee stressed the need to innovate when he returned as its chairman in March, almost two years after stepping down following a probe into his business dealings.
“This is a time of real crisis. Global companies are crumbling. We don’t know what will happen to Samsung either,” he said at the time. “Within 10 years, all Samsung products may disappear. Now we have to start anew.”
Samsung said the investment plan was agreed during a meeting Monday attended by Lee and heads of the group’s affiliate firms.
“Governments around the world are now investing in green industries to address the issues of depleting energy resources and the protection of our planet’s environment,” Lee was quoted as telling the meeting.
“When other global companies hesitate, we must move ahead decisively to take this opportunity, and this will also benefit the country’s economy.”
Moody’s Economy.com economist Alaistair Chan said the government in Seoul seemed to be following up on a pledge to boost growth through green tech manufacturing and this was filtering into private investment decisions.
“Given that Samsung is such a big player in electronics manufacturing it was highly likely that some sort of research and development initiative in terms of energy-efficient products would be enacted at some stage,” he told AFP.
If Samsung could achieve innovations in biomedical research, “they could do well as all those baby boomers around the world reach retirement age and medical spending goes up”.
Kim Woon-Ho, an analyst with Prudential Investment and Securities, said Lee had outlined “rice bowls” for the next generation.
“The themes he has selected are all hot items whose growth potentials are all remarkable and I think he opted for the right direction,” Kim said.
“Other South Korean groups have been talking loudly about their interest in next-generation industries. But this is the first time that a large-scale investment programme in those fields has been announced in concrete form.”
The group said key investments include 6 trillion won to develop and manufacture solar cells; 5.4 trillion won in rechargeable cells for hybrid electric vehicles; 8.6 trillion won in LED technology for uses including backlit displays, lighting and car electronics; 2.1 trillion in biopharmaceuticals; and 1.2 trillion to develop and make electronic healthcare equipment.
Samsung Electronics alone employs about 188,000 people in 185 offices across 65 countries.