How Samsung puts Fair Electronics on hi-tech trajectory
With around half a dozen electronic goods already in the product basket, Fair Electronics now looks to assemble passenger vehicles in Bangladesh in association with an international brand.
Fair Group calls it "progressive manufacturing", a strategy by teaming up with foreign companies that does not require the detailed technical know-how and heavy investment in research and development, making international brands available to local customers at reasonable cost.
By adopting the process, the business conglomerate says, Bangladesh can become an electronics production hub like China. And Fair has its record book to argue for the claim.
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Take for the latest Galaxy Z Fold 3 5g and Galaxy Z Flip 3 5g handsets those were internationally launched in August by Korean electronics giant Samsung. With Korean tech support, local engineers manufactured the phone for the Bangladesh market in Fair's Narsingdi factory – the local assembly partner of Samsung.
At the production facility, Fair Group is now making other Samsung phones such as Z Fold 3 5G, S21, S21 Plus and Ultra.
"The Korean partnership has helped us build our state-of-the-art electronics manufacturing plant. Our youths are now getting skilled by working with the Korean engineers at the production lines," Mohammad Mesbah Uddin, chief marketing officer of Fair Electronics, told The Business Standard.
Fair Electronics began production in its Narsingdi factory located on 55 bighas of land in 2018. Now more than 2,000 engineers are working there and most of them are Bangladeshis.
The factory is supplying almost 100% of the Samsung mobile handsets in the Bangladesh market. It also supplies 90% of the refrigerators, televisions, air conditioners, washing machines and microwave ovens of this brand.
The chief marketing officer said the local engineers are now re-engineering Samsung's products after learning from the Koreans.
"The factory in Bangladesh has been ranked 7th among the 26 global factories of Samsung due to the production knowledge and skills of our engineers," he said.
Powered by R&D transfer
Although the factory does not have its own R&D (research and development) wing, almost all the works are being done by local engineers as per the original R&D transfer by Samsung, said Mesbah Uddin.
According to people concerned, the factory has four layers of skilled manpower. The first layer is directly controlled by Samsung engineers from Korea and India.
At the beginning, the factory solely relied on them. But the layer now has only six foreigners as local engineers had gradually taken over the tasks of the foreign experts.
Engineers in the second layer are entirely Bangladeshis who have passed from different engineering institutions of the country. However, they were sent to Korea for training for 40-45 days after recruitment. They were also sent to Samsung factories in Vietnam and Indonesia to observe the working process.
The manpower for the third and fourth layers are also recruited from Bangladesh. They have to go through a one-month training period after recruitment.
The company has so far invested more than $200 million in setting up modern machineries in the factory. The investment would exceed $1 billion combined with raw materials, working capital and marketing costs, Mesbah Uddin said.
"There are more than 40 showrooms for mobile phones and more than 50 showrooms for other electronic products across the country. There is also capital support in about 225 franchises of mobile and about 140 franchises of other electronics products," he went on saying.
"We manufacture almost all refrigerators in Bangladesh. The eight models made in this factory cover 93% of the Samsung refrigerators sold in the country. We import nothing except compressors."
"We started making air-conditioners and washing machines last year. All the parts except the compressor are also made by us, combining to more than 40% value addition," said Mesbah Uddin.
Local manufacturing makes them more affordable
Fair Electronics officials said assembling Samsung products in Bangladesh is allowing them to keep the prices low in the local market.
For example, the market price of the latest model of Samsung smartphone Galaxy Z Fold-3 5G in the global market including Europe-America is Tk1.7 lakh, which is Tk1.74 lakh in India. But Fair Electronics is selling the phone at Tk1.5 lakh in Bangladesh with cashback offers, lotteries and gifts.
Mesbah Uddin said, "If it were not assembled in the country, 57% tax would have been added to the import price raising the phone's price to around Tk2 lakh."
Describing the benefits of re-engineering, he said, "The price of an RB21 refrigerator was Tk49,990 in Bangladesh. But when we started manufacturing it, the price came down to Tk34,000. Now we are in the process of re-engineering the model and it will further lower the price to below Tk30,000."
"The price of a 65-inch UHD TV is now Tk110,000 which was over Tk2 lakh before we started manufacturing. The same goes for washing machines and air conditioners," he added.
Fair to start car assembly
Fair Technologies, a sister concern of Fair Group, has teamed up with Korean passenger vehicle manufacturer Hyundai Motor.
A car assembling plant is being set up by the joint venture on around six acres of land in Gazipur's Kaliakoir. Fair Technologies initially plans to produce popular Hyundai models such as sedans, sport utility vehicles and multi-purpose vehicles.
Ruhul Alam Al Mahboob, chairman of Fair Technologies, said, "This factory is a new milestone for our country. A large number of skilled manpower will be created here as well as a backward linkage industry will be developed. It will create an opportunity to produce around 100 car related materials including dashboards and seat covers in the country."
