Nokia – Samsung the battle of the two tigers

VietNamNet Bridge – Finnish Nokia still holds the biggest mobile phone market share in Vietnam. However, its Number 1 position has been shaken with the rise of Samsung.

Vietnam, Nokia, Bac Ninh, Samsung, smart phone, investment, tax incentives

Nokia plans to put the factory in the Vietnam – Singapore Industrial Zone in Bac Ninh province into operation in June 2013, when it would churn out 30 million products. The productivity would increase gradually to 180 million products by 2018.

Of the total investment capital of $302 million, $67 million would be disbursed in 2013, while the figure would be $100 million in 2014 and $102 million in 2015.

In order to attract Nokia to Vietnam, the country has to offer a lot of investment incentives, including the preferential corporate income tax of 10 percent for the first 15 years of the production, and the corporate income tax exemption for the first 4 years and the 50 percent tax reduction in the next 9 years.

With the investment capital of over $300 million in total, Nokia is hoped to generate 10,000 workers.

The fact that Nokia has closed down some of its factories in the world, but sets up a new factory in Vietnam can show the attractiveness of the Vietnamese market. This might also be the reason for Samsung to develop its projects in Vietnam.

According to GFK, a market survey firm, Nokia held 54 percent of the market share in 2011 and 56 percent in 2012. However, if considering the value, the giant has made a step back with the market value decreasing from 52.6 percent in 2011 to 45 percent in 2012.

The decline of Nokia has brought the golden opportunities to other manufacturers, including Samsung, to arise.

In 2011, Samsung only accounted for 15 percent of the total mobile phone products consumed in the market. The figure rose to 23 percent in 2012. However, if considering the value, Samsung’s share market increase is sharper, from 17.8 percent to 30.6 percent.

Especially, in the last months of 2012, Samsung, while accounting for 21 percent of the market share only, had its products’ value accounting for 34 percent of the total market value.

It seems that Samsung has left the popular mobile phone market segment opened, while concentrating on smart phones. The popular mobile market segment is believed to be less profitable than the smart phone segment. The South Korean manufacturer targets the high income earners who like using fashionable products.

Also according to GFK, in terms of quantity, in the popular mobile phone market, Nokia’s market share increased from 55.9 percent in 2011 to 65.5 percent in 2012. Meanwhile, Samsung’s has been hovering around 15.1-15.3 percent.

In the smart phone market segment, Samsung’s market share has been expanding steadily from 22.7 percent in 2011 to 46 percent in 2012. Meanwhile, Nokia’s decreased sharply from 46.6 percent in 2011 to 24.2 percent in 2012.

The fact that PSD, which was a distributor of Nokia’s products in Vietnam with 45 percent of market share, said goodbye to Nokia and joined hands with Samsung after that, is an evidence showing that it’s very difficult to obtain the market, but it’s even more difficult to retain it.

PSD began distributing Nokia’s products in mid 2007, when there were three other Nokia product distributors already, including FPT.

In 2009, the amount of Nokia phones distributed by PSD and FPT was equal. Both of them distributed the number of products accounting for 95 percent of the total Nokia’s products sold in Vietnam.

As such, the parting of PSD would be the bad news for Nokia when implementing its business plans in the Vietnamese market.

Vietnam, Nokia, Bac Ninh, Samsung, smart phone, investment, tax incentives