Yonhap Feature) S. Korean home appliance makers rush to Poland to lead Europe

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By Lee Youkyung
WRONKI, Poland, Sept. 12 (Yonhap) -- After four hours on bumpy roads through
alternating landscapes of wide plains and dense woods to the east of Berlin
emerges Wronki, a small town in central west Poland.
The town has the country's top home appliance maker, Amica Wronki S.A., a few
miles away from a tiny two-story house bearing a hand-written sign of Wronki,
which serves as an unofficial gateway to this quiet place.
Wronki, which retains some of the fairytale charm of the Polish rural landscape,
has been recently joined by new residents from faraway East Asia. South Korea's
tech titan Samsung Electronics Co. acquired Amica's washer and refrigerator
production facility for US$76 million in April as part of its efforts to expand
its presence in the European market.
"When I was traveling Poland with then vice chairman Yun Jong-yong four or five
years ago, I saw Amica and I thought, it looks new and nice," Choi Gee-sung,
chief executive officer of Samsung Electronics Co., said in Berlin after his
recent visit to Wronki. "We needed a manufacturing line near Europe for home
appliance business. It was one of our long-desired enterprises."

As the first acquisition since Choi took the helm, Samsung Electronics Poland
Manufacturing (SEPM) became the only European household appliance production line
owned by Samsung, which already operates six home appliance plants in South
Korea, China, Thailand, Malaysia, India and Mexico.
"Having a manufacturing line right next to customers is significant," said Kim
Deug-geun, president of the Wronki plant. "Before the acquisition, it took us two
months to deliver products from Asia. Now it takes about one week at most."
Because of the bulky size of free-standing refrigerators and washers, shipping
costs account for a big chunk of the price, he said. With the new plant near both
Eastern Europe and Western Europe, white goods spread nationwide in Poland and
also go as far as Portugal through Germany about four weeks faster than before.
Samsung, which controls 8 percent of the refrigerator market and a mere 2 percent
of the washer market in Europe, believes it will become the continent's top
supplier once it completes new lines for side-by-side fridges and high-end models
in Wronki.
"Nobody expected the development to be so big and so fast," said Robert
Stobinski, the SEPM vice president who held a director position at Amica before
the merger. "To support Samsung Electronics in Europe, we have to increase
capacity seven times in three years. We already doubled the quantity in four
months (to meet) customer wishes."
By 2013, the company estimates the annual production capacity to be 2 million
units each for washing machines and refrigerators, quadrupling the current
production. The ramp-up will give Samsung about a 12.5 percent share of the
European market estimated at 16 million units a year, which should be enough to
drive the company to the top spot, its officials said.
With the Korean company's entry, the village of Wronki underwent some positive
changes as well. With Samsung's hiring of 840 local employees upon the takeover,
1,500 out of some 11,000 Wronki residents are now on Samsung's payroll. The
town's unemployment rate is at 9 percent, lower than Poland's countrywide average
of 12 percent, according to Kim who is one of nine Korean employees there.
About 200 kilometers south to Wronki, another Korean company is pinning high
hopes on its home appliance enterprises in Europe. LG Electronics Inc., Samsung's
domestic rival in TV, mobile phone and home appliance areas, also selected Poland
as its production hub.
But unlike Samsung which acquired an existing local company, LG chose to build
its own factory for flat-screen TVs and consumer electronics products in Wroclaw
in southwestern Poland four years ago.
It announced last week a new investment in the Polish plant worth $70 million for
the next five years, designed to help the company expand its presence in European
home and kitchen appliances market.
LG, which supplies 8 percent of fridges and 7 percent of washers in Europe, is
expecting to produce 700,000 washers and 1.4 million fridges a year by the end of
the investment.
"That will add 2-3 percent to our market share," said Ahn Jae-hyung, general
manager at LG's home appliance marketing team.
Samsung's and LG's strategies in Europe diverge as one opted for merger and
acquisition while the other built a new plant of its own from scratch. But they
both view Poland as a springboard to achieve their European dreams.
"Poland has the most populous country (in Europe) after Britain, France, Germany
and Spain, so its domestic market is large and it offers an ample pool of labor,"
said LG's Ahn.
Samsung, which was also intrigued by Amica's more than 10-year experience in home
electronics making and the Polish firm's close relationship with component
suppliers in Europe, says Wronki's location was another attractive factor.
"Merger and acquisition is usually not easy, but Amica was located in the exact
place we wanted," said Hong Chang-wan, vice president of Samsung's home appliance
division.

ylee@yna.co.kr
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