November 26, 2024

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Galaxy S22 (Samsung Electronics)

Samsung Electronics has suspended its shipments to Russia and donated $6 million to Ukraine, according to industry sources Sunday.

The South Korean tech giant has become the latest multinational firm to join comprehensive sanctions against Russia, where the market has crashed and the value of the ruble has plummeted. Despite its export embargo on Russia, Samsung Electronics will still operate local factories there.

“Shipments to Russia have been suspended due to the current geopolitical situation. The next step will be decided after careful monitoring of the complex situation,” a company official said.

Compared to Western companies like Apple and Intel, which have imposed outright sales bans in Russia, Samsung Electronics remained cautious, saying it was an “inevitable decision due to aggravating export conditions.”

Samsung Electronics’ TV factory near Moscow will continue to manufacture products as components remain in stock. However, should sanctions on Russia continue, the TV factory might face complications in production.

At the same time, Samsung Electronics is in talks with an international organization to donate $6 million to the Ukraine Red Cross, including consumer electronics worth $1 million. Voluntary donations from Samsung Electronics staff and executives will also be delivered to Ukraine.

Meanwhile, Mykhailo Federov, vice prime minister and minister of digital transformation of Ukraine, recently sent a letter to Han Jong-hee, vice chairman and CEO of Samsung Electronics, urging Samsung to “temporarily stop supplying services and products to Russia, including blocking access to Samsung Pay, Samsung Galaxy Store and Samsung Shop.”

Russia is a special market for Samsung Electronics. In 2020, Samsung Electronics ranked as the most beloved brand among Russian consumers for a 10th consecutive year, according to Online Market Intelligence. Counterpoint Research data shows that Samsung Electronics was No. 1 in both smartphone and TV markets in Russia as of the fourth quarter last year.

Russia’s love for Samsung Electronics dates back to the 1998 Russian financial crisis, which was due to domestic debt, when it declared a 90-day moratorium on repayment of foreign debt.

After the moratorium, big foreign companies such as Sony packed their bags and left the market, but Korean firms including Samsung Electronics, LG Electronics and Hyundai Motor stayed. Thanks to the commitment to the Russian market in difficult times, when the Russian economy recovered in 2000, Korean firms were compensated with loyal consumers in the market.

By Kim Byung-wook (kbw@heraldcorp.com)