Daily Management Review

Production Of Smartphone In China Plant To Be Cut By Samsung Electronics


Production Of Smartphone In China Plant To Be Cut By Samsung Electronics
The largest smartphone maker of the world South Korea’s Samsung Electronics Co Ltd is facing a very stiff competition from domestic Chinese tech companies in the Mainland China market which has reduced its market share to a very small 1 per cent. This has forced the South Korean tech giant to announce reduction in production at a smartphone plant in China.
It has been just six months that Samsung had announced that it would close down one of its handset manufacturing unit in China located in the northeastern city of Tianjin, which the company had claimed then would increase its efficiency. That had left the company with just one production unit for Samsung in China located in the southern city of Huizhou for which production cuts have been announced.
At the beginning of 2013, the market share in China of the largest smartphone maker of the world Samsung, was about 20 per cent and reached as low as 1 per cent in 2018 according to analysis of data available from Strategy Analytics. Apart from the stiff competition from domestic Chinese smartphone makers, since 2013 there has been a spate of anti South Korean sentiment in China after a diplomatic spat. This was compounded by Chinese consumers choosing smartphones from local companies such as Huawei Technologies Co Ltd amidst a deteriorating Sino-US relations.
There was however an increase in smartphone sale volume of 40 per cent of Samsung in China in the three months of 2019 compared to the sale achieved by the company in the previous three months. This increase was driven by strong promotion of premium models and the promotion of handsets that were cheaper and aimed for the mass-market according to an April report from Counterpoint Research.
Some time back a report published in financial magazine Caixin claimed that the South Korean tech giant had made offers of voluntary retirement for a section of its employees at its Huizhou plant, which was partially confirmed by the Wednesday announcement by Samsung.
No details of the capacity of the plant, staff numbers or degree of production cut were provided by Samsung. The media reported a spokesman for the company in China saying that there would be “some adjustment to production volume and staff” based on the market situation. No details were provided by the spokesperson.
The smartphone maker’s share price was 1.0% higher in afternoon trade in Seoul. The KOSPI benchmark share price index was down 1.0%.

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