Samsung, Venezuela strike a deal

Home > Business > Industry

print dictionary print

Samsung, Venezuela strike a deal

The Venezuelan government allied with Samsung on Wednesday to jointly produce consumer electronics and appliances, a deal coming after a week of raids on retailers and the emptying of store shelves by consumers taking advantage of enforced discounts.

Rafael Ramirez, Venezuela’s longtime oil minister and now vice president for the economy, signed the agreement with the Samsung’s regional president, Hyun Chil-hong, a day after the National Assembly gave President Nicolas Maduro powers to rule by decree for up to 12 months.

Economists said they expected Maduro to tighten government controls on Venezuela’s economy to the detriment of private enterprise.

Samsung will initially invest $50 million in a factory for the joint production and Venezuela will take a controlling interest, Ramirez said. Its location, output and start date won’t be announced for at least a month.

In the meantime, the government will import 400,000 Samsung major home appliances and other electronics worth about $100 million to arrive in “the coming days,’’ Ramirez said at the signing ceremony.

He said they would come from Samsung plants in Brazil, Mexico and Argentina.

Rather than a sign of investor trust, the Samsung-government alliance underscores what is fast becoming the prevailing business model in Venezuela’s inflation-plagued economy, with the government supplanting private business and directly supplying goods to stores at fixed, discounted prices.

“All countries have their problems,’’ Hong said when asked why Samsung would invest in a country with a distressed economy. “I think we can overcome this type of situation with good collaboration.’’

Economists say the government directly imports more than 40 percent of consumer goods sold in Venezuela.

Venezuela signed a similar agreement earlier this month with Mexican appliance maker Mabe to produce and sell stoves, refrigerators and other durable goods at “fair prices’’ well below what Venezuelans have grown accustomed to amid soaring inflation.

In exchange for billions of dollars in loans, the Venezuelan government is also a major buyer of Chinese-made goods that stock the shelves of a government-run retail chain.

Maduro on Nov. 8 ordered the military to take control of several retail chains accused of gouging consumers by charging prices that he says don’t reflect the currency exchange rate the government uses to mete out increasingly scarce dollars.

AP

More in Industry

Work at home is not as easy as it sounds, ministry says

Flying visit

[NEWS IN FOCUS] Spotify is still almost here, and seems to be getting closer

Korea Inc. calls on Suga to relax border restrictions

House-bound consumers awaken a sleeping industry

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now