Daily Management Review

Samsung Ends Smartphone Manufacturing In China


Samsung Ends Smartphone Manufacturing In China
The South Korean electronics giant Samsung Electronics Co Ltd announced on Wednesday that it would end production of its mobile phones in China. The company said that its fortunes and market share in the largest smartphone market in the world were being hit significantly by local Chinese rivals.
Production at the last of Samsung’s phone manufacturing factory in the southern city of Huizhou in China was already reduced significantly by the company in June this year and therefore this shutdown of the unit was being anticipated by some. The company also announced the suspension of production in another factory in the country last year. These measures show that the company had been hit by increasing competition in the Chinese market for quite some time now.
This decision by the South Korean tech giant and the largest manufacturer of smartphones in the world, to stop production in its last operational factory in China comes after a number of other companies have also already shifted their production facilities outside of China because of increasing labor costs in the country and a slow down of the domestic economy of the country threatening demand.
Closure announcement of its Beijing smartphone plant had recently been made by Japanese company Sony and said that it would make phones only at its facilities in Thailand.
However US tech giant Apple still manufactures a number of its major products in China.
According to market research firm Counterpoint, in the first quarter of the current year, the market share of Samsung in the China was reduced to just 1 per cent compared to about 15 per cent that it enjoyed in mid-2013 as a number of domestic Chinese rivals such as Huawei Technologies and Xiaomi Corp engaged in aggressive growth and gobbled up Samsung’s market share.
“In China, people buy low-priced smartphones from domestic brands and high-end phones from Apple or Huawei. Samsung has little hope there to revive its share,” said Park Sung-soon, an analyst at Cape Investment & Securities.
The decision of ending production in China was taken by the company in its effort to enhance efficiency, Samsung said. Samsung would continue to sell its products in China, Samsung confirmed.
“The production equipment will be re-allocated to other global manufacturing sites, depending on our global production strategy based on market needs,” it said in a statement, without elaborating.
Samsung did not give any details about the capacity or the numbers of staff at its Huizhou plant. According to the company, the facility was constructed in 1992 and according to media reports in South Korean, the facility manufactured 63 million units in 2017 and provided employment to 6,000 workers. And according to its annual report, Samsung had manufactured a total of 394 million handsets around the world in the same year.
In recent years, Samsung has shifted its smartphone production facilities to markets with lower production costs such as India and Vietnam.