South Korean electronics giant Samsung has downgraded its
Nairobi regional office in a major operational shake-up that is likely
to result in loss of jobs, joining a host of other multinationals that
made similar moves.
The Seoul-based firm said the
changes, which come barely two years after it sent home 26 executives
from the Nairobi office, are meant to cut costs and improve efficiency
across its African market.
The shake-up will see
Samsung East Africa’s chief executive and chief finance officer relocate
to the company’s South Africa offices, according to sources familiar
with the matter.
“By centralising operations and
resources, we plan to introduce greater levels of efficiency, and this
strategic move will also enable us to focus more significantly on
product, sales and marketing functions,” Samsung said in response to our
queries.
“We’re unable to provide further details on
how many jobs will be affected. Our primary objective is to prevent job
losses as we strategically align the business operations.”
Samsung has a workforce of 70 at the Nairobi office, about half the 120 employees the firm had in 2015.
Coca-Cola
last year downgraded its massive regional headquarters in Nairobi and
relocated a significant chunk of operations to South Africa, resulting
in 40 job losses.
Barclays Africa Group last year closed its regional management office in Nairobi, shifting all support role to South Africa.
Finnish
phone maker Nokia in 2012 demoted the Nairobi hub from regional
headquarters to a local sales office, a move that put it under South
Africa. An undisclosed number of staff lost jobs.
Samsung
opened the Nairobi regional hub in November 2003 targeting to grow
market share in the East African market with its range of products such
as TVs, cell phones, computers, and home appliances.
It
also embarked on setting up service centres across Kenya and the region
to provide after-sales services to customers and wade off stiff
competition from Asian rivals such as LG, Huawei, Tecno, Asus, Sony,
Lenovo, ZTE, Panasonic and Toshiba.
Mobile phones are Samsung’s bread and butter and have come under pressure from low-cost Chinese gadgets.
The
Nairobi office downgrade now puts to doubt Samsung’s plans to set up an
electronics assembly plant at the upcoming Konza techno city.
Samsung declined to comment on the impending relocation of top Nairobi executives to the Johannesburg.
“We
are unable to provide further details on this. We are following a due
process and we will keep you posted once it is finalised.”
A
total of 26 senior and mid-level managers left Samsung in 2015, with
sources attributing the exits to alleged internal fraud and accounting
malpractices at the Kenyan office.
The change in Africa
strategy comes as Samsung is battling strong headwinds on the global
front, related to corruption, falling sales, and recall of botched
products.
A court in South Korea has sentenced Samsung’s billionaire heir-apparent Lee Jae-yong to five years in prison for corruption.
Samsung’s
smartphone sales declined 3.1 percentage points in the first quarter of
2017 due to stiff competition to close with a market share of 20.7 per
cent, according to data from Gartner.
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