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| A passerby wearing a protective face mask, following the outbreak of the novel coronavirus disease, walks past an electric screen displaying logos of the Tokyo 2020 Olympic Games and Galaxy, a brand name of mobile computing devices created by Samsung Electronics, the worldwide smartphone partner for the Games, at Galaxy Harajuku in Tokyo, Japan, Friday. Reuters-Yonhap |
By Kim Yoo-chul
The rapid and widening spread of the coronavirus, deteriorating global economic outlook and falling oil prices are creating a severe and very extensive business shock for Samsung Electronics and LG Electronics overseas businesses as the South Korean technology firms closed their key plants in Brazil and the United States.
On Friday, Samsung Electronics said it has decided to close both its manufacturing facilities in Campinas, southeastern Sao Paolo, Brazil, for two weeks from April 30 to keep workers at the factories safe as the highly contagious coronavirus spreads.
Additionally, Samsung decided to extend the closure of its other plant located in the city of Manaus, Brazil, until April 12. The closure came after growing concerns about the virus were forcing most manufacturing plants both in North and South America to close temporarily.
Samsung officials said the company will have to evaluate the spread of the virus before reopening the plants. "We have been applying extra precautions in our overseas factories to keep the factories and workers safe. The point is that the latest updates in North America and South America showed that we have to close, right away," an official said.
Ahead of the latest announcements, Samsung's sales offices in Brazil, its Brazilian headquarters and R&D center in Campinas have had employees work from home since March 23. Samsung said it also closed all offline stores across the country the following day.
"We will notify customers regarding the reopening of offline stores based upon how the situation develops. Until then, all Samsung products will be sold via online channels," the Samsung official said. Samsung operates 300 offline stores and 17 service centers.
LG Electronics, which already announced the closure of its plants in India, said on the same day that it has decided to shutter its washing machine manufacturing plant in the United States for two weeks due to the spreading coronavirus.
"Operations at LG Electronics' plant in Clarksville, Tennessee, will be suspended from Monday to April 12," LG Electronics said. The plant produces 100,000 washing machines on a monthly basis and employs some 600 workers.
Despite the apparent slowdown of the coronavirus outbreak that initially emerged in Wuhan, China, the virus is now rapidly spreading across Europe and the Americas with the World Health Organization declaring the virus a "pandemic."
The pandemic will severely impede economic and social activities and subsequently hinder consumer purchasing power. The closure of the South Korean plants is expected to take a toll on their respective bottom lines, according to company officials and market analysts.
