Samsung closes shop in China
...says buyers go for low-priced smartphones from domestic brands and high-end phones from Apple or Huawei
SAMSUNG’s last China phone factory has announced the shutting down of the facility a few months after its production decline in June due to stiff competition in the country.
The South Korean tech giant’s ceased phone production in China follows other manufacturers shifting production from China due to rising labour costs and the economic slowdown.
Unfortunately, Samsung’s share of the Chinese market shrank to 1% in the first quarter from around 15% in mid-2013, as it lost out to fast-growing homegrown brands such as Huawei Technologies and Xiaomi Corp (1810.HK), according to Counterpoint, a market research firm.
“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 company said it had taken the difficult decision in a bid to boost efficiency but will continue sales in China.
“The production equipment will be re-allocated to other global manufacturing sites, depending on our global production strategy based on market needs.”
According to the tech company annual report, Samsung produced 394 million units of handsets in the world, with 63 million of that number (63 per cent) produced in China in 2017.
Sony another tech giant has also revealed that it was closing its Beijing smartphone plant and would only make smartphones in Thailand.
But it doesn’t seem like some tech companies have been registering losses with buys preference for low cost phones as Apple (AAPL.O) still makes major products in China.