Samsung has started taking baby steps into the green business while signaling big intentions about growth and investment.The Company sees most of the future growth to be driven by clean technology,while noting that some the areas where it is dominant in might not exist at all in the future.It already has existing small business lines in renewable energy and energy storage,but nothing to speak of .Though it has not started using the semiconductor expertise in a big way yet,it could do so by greenfield investments or by making acquisitions in this space as valuations for wind and solar companies remain at low levels.It recently announced a big investment commitment to Ontario in offshore wind and solar manufacturing and generation.It is ably supported by the Korean government which has the world’s largest spending as percentage on green technology according to a UN report.A large home market is essential for the company to gain scale and attain expertise.The company wants to rival conglomerates like GE and Siemens which already have a large presence in wind,solar and smart grid technologies.Even home grown rivals like LG and Hyundai have started making forays into energy storage,smart grid and renewable energy making it an imperative for the company to enter these areas as well.
South Korea’s biggest business conglomerate Samsung Group said on Tuesday it would invest 23.3 trillion won ($20.6 billion) by 2020 in new businesses including health care and green energy technology.
Samsung picked solar cells, rechargeable cells for hybrid electric cars, light emitting diodes (LED), biopharmaceuticals, and medical devices for new growth areas in its first detailed investment plans to challenge rivals such as General Electric, Dutch firm Philips Electronics and Japan’s Sanyo Electric.
The group, which generates around one fifth of South Korea’s total exports, forecast the new growth businesses would create 50 trillion won in annual revenues for group companies including its flagship firm Samsung Electronics by 2020.
The investment plan comes after Lee Kun-hee, the son of its founder, returned as the chairman of Samsung Electronics in March, nearly two years after he stepped down following a legal scandal.
Lee, 68, has repeatly warned most businesses and products that represent Samsung today would disappear from the market in 10 years and said it needed to start again.
“Governments around the world are now investing in green industries to address the issues of depleting energy resources… We must move ahead decisively to take this opportunity,” Lee said in a statement.
Ontario will unveil Thursday a deal with Samsung that will see the South Korean manufacturing giant invest $7 billion over six years to build four wind and solar equipment factories and up to 2,500 megawatts of generating capacity, a government source says.
In exchange, the province will set aside capacity on the transmission grid for the company and pay a top-up on the price of every kilowatt-hour (KWH) in electricity it produces, as long as job and manufacturing targets are met. Ontario’s feed-in-tarif price for such electricity is 13.5 cents per KWH.
The deal will not only cement Ontario’s position as the leading North American generator of renewable energy, it will also establish “the first real cluster” of renewable energy manufacturing on the continent, the source said.
Up to 15,000 direct and indirect jobs could be created from the investments, the government hopes.
The United Nations Environment Programme’s latest report ranked seven major countries based on how much they are spending on environment-themed ventures.
The Asian country beat China, France, Germany, Mexico, South Africa and the United States in the overall rankings for green stimulus spending in the “Global Green New Deal” published by the U. N. Environment Programme this month.
According to the report, South Korea has already used up 79 percent, or $30.7 billion, of its $38.1 billion economic stimulus package exclusively for green initiatives by August this year.
Water and waste sector received 45 percent of the funding while 23 percent went to railways, 20 percent to energy efficient buildings, and 6 percent each to renewable energy and low carbon vehicles.
The report adds that beyond the green stimulus South Korea appears to be shifting its economy towards a long-term strategy for green growth. In July 2009, the country adopted a medium-term plan that would implement a “low-carbon, green growth vision” from 2009 to 2013.
Under the plan, South Korea will allocate $83.6 billion for climate change and energy, sustainable transportation and the development of green technologies.
The five-year plan is expected to stimulate production by $141 billion to $160 billion, and create 1.56 million to 1.81 million jobs in green industries.
South Korea is presently adopting policy, regulatory and fiscal reforms that would provide the architecture for green growth.