As part of the plan to move the business out of China, Samsung’s South Koreans have just sold the LCD screen factory in Suzhou to a group of local companies.
According to the rules imposed by the Chinese Communist Party, foreign companies active in the country can only operate in association with a local partner and are required to appoint a legal representative approved by the Party on the management board. Indeed, the Chinese authorities ensure that they can follow the activities of those companies in the shadows and that they can intervene in business decisions at any time, with at least as much decision-making power as owners from abroad. Also part of the “plan” is the state intervention for the de facto nationalization of foreign companies that have become too inconvenient, forcing the sale of assets to other local companies firmly under the control of PPC.
But for Samsung, leaving China by selling the latest LCD screen factory to Chinese buyers was probably the most convenient choice, with South Koreans already planning to give up LCD screen busines because the technology is outdated and, anyway, about to be replaced.
Following the $ 18 billion transaction, 60% of Samsung’s LCD factory will be controlled by CSOT, 10% by TCL’s parent company and the remaining 30% will be under the control of the local authority in the Suzhou region, located directly in PPC subordination.
The factory in Suzhou was responsible for about 27% of all LCD screens shipped by Samsung, most of which were for PC monitors and TVs.
Part of the arrangement, Samsung display reinvested $ 723 million of the amount received back in companies managed by TCL, totaling 12.33% of the shares of the Chinese company.