us-sanctions 19 February 2020

Iran hits back after Samsung and LG pull out

Iran’s Foreign Ministry has hit back against South Korean tech giants Samsung and LG for pulling out of the country in response to US sanctions.

In a tweet, Foreign Ministry spokesman S A Mousavi warned that once the companies had left the Iranian market it would be very difficult for them to re-enter it. According to trade principles, Mousavi tweeted, maintaining a foothold in a national market is harder than gaining it, adding that Iranians would ‘not forget friends’ who stood by their side during hard times.

Iran’s Deputy Foreign Minister Abbas Araqchi had also warned that companies leaving Iran ‘have lost a market that they cannot retake easily’, while Iran’s government-associated Information Technology Organization went further, calling on Samsung to reverse its decision or face consequences. Mohammad Jafar Nannakar, the organisation’s legal director, reportedly said a legal ultimatum is in the works ‘so that [Samsung] knows that it is violating Iranian market policies.’

Nannakar said that his organisation had contacted Samsung and ‘if they are continuing with this policy against the Iranian market, Korean nationals working in Iran, working for Samsung, will not have their visas renewed.’

The warnings came as Samsung moved to block Iranian users from accessing paid sections of its online Galaxy Store, although they are still able to access free content. In an email to its Iranian subscribers, Samsung said it had taken the decision due to sanctions-related money transfer issues.

Iran has been a significant market for the two companies. Samsung is reportedly Iran’s largest mobile phone provider, with a 2018 market share of around 55%. Both Samsung and LG had opened assembly plants in Iran, but have now closed them. The companies stopped direct sales in the country when US sanctions came into force, but have kept up with advertising until this month.