Samsung C&T pursues makeover amid slump

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Samsung C&T pursues makeover amid slump

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Korea’s construction industry is undergoing a sweeping makeover after experiencing a long-term slump. A reduction in orders for domestic construction projects, low profitability issues, and heightened competition with overseas petrochemical plants have pressured the industry to undergo fundamental transformation for survival.

Samsung C&T is one of the leading players in the industry pursuing innovation. In 2009 the company strictly focused on the domestic market, with only $1.57 billion worth of overseas orders. Now, it has a global reputation built by aggressive market expansion and business diversification.

This July, Samsung C&T secured orders for Saudi Arabia’s $1.97 billion Riyadh Metro project, which resulted in its overseas contracts surpassing a total of $10 billion. This figure takes up 30 percent of the total domestic orders amount in the construction industry. Assignment of Jung Yeon-Joo as CEO and Vice Chairman in 2010 paved the way for Samsung C&T’s success. After acknowledging that focusing too much on simple construction work in the domestic market was not enough, the company began to expand its value chain. In addition to construction, capacities in engineering and procurement were strengthened. Feasibility study and operations and management were also included in Samsung C&T’s value chain. Resources were allocated to develop sources for new growth power and win contracts for mega projects.

These efforts for diversification have been paying off. Samsung C&T has won orders for infrastructure packages related to resource development. In 2009 the company signed an engineering, procurement and construction (EPC) contract for the Qurayyah Combined Cycle Power Plant, the world’s largest independent power generation project. Now in construction, it is the first project for a domestic construction company to carry out IPP business overseas through equity investment. The company also showed progress as a total solutions provider in the health care field, as it is currently waiting to sign a contract for the Gaziantep health care complex in Turkey through a public-private partnership (PPP).

Samsung C&T is also doing well in mega projects. It was awarded a $5.6 billion project to build a plant, railway and port for Australian Roy Hill Iron Ore in March. The Qatar Doha Metro project, worth $700 million, and Saudi Arabia’s $1.97 billion Riyadh Metro project have been added to Samsung’s contract list.

Vice Chairman Jung plans to further bolster Samsung C&T’s drive for innovation and accelerate its transition into a global company. Through strengthening relationships with global customers and partners, obtaining top-class technologies and human resources, and pursuing active marketing, Samsung C&T aims to strengthen its position as a global leading player by reaching $33 billion in overseas orders and $22 billion in revenue by 2015.

“Now is the opportunity for the construction industry to lead the creative economy,” said Jung. “Samsung C&T will leap to a global company by pursuing continuous change and innovation.”

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