Samsung Stops Production of Phones in Chinaby Anton Shilov on October 2, 2019 12:00 PM EST
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Samsung had ceased to make mobile phones in China, the company revealed on Wednesday. The company has been withdrawing from handset manufacturing in the country for a while now as its position in the Chinese market is not strong, whereas business conditions are better elsewhere.
Samsung used to run multiple phone manufacturing facilities in China. About a year ago, the company shut down its plant in Tianjin, then it closed its plant in Huizhou in mid-2019. Recently, the world’s No. 1 maker of smartphones ceased production of handsets in another factory in Huizhou. Equipment used at its facilities in China was relocated to plants in other countries, such as India and Vietnam.
The statement by Samsung reads as follows:
"As part of our ongoing efforts to enhance efficiency in our production facilities, Samsung Electronics has arrived at the difficult decision to cease operations of Samsung Electronics Huizhou."
There are at least three major reasons why Samsung decided to stop making phones in China. First of all, its market share in the country has recently dropped from 15% in mid-2013 to 1% as of today, as the company lost market share to companies like Huawei and Xiaomi (based on data from Counterpoint). Secondly, rising labor costs in China make the country less attractive for large corporations. Thirdly, the ongoing trade war between China and the US poses risks for Samsung as goods produced in China may be subject to tariffs in the United States.
Samsung is not the only company to move production from China to other countries because of rising labor costs as well as the trade war with the US. Companies like ASUS and Apple also ask their suppliers to produce components for their products in other contries because of concerns about tariffs.
- Samsung Mulls Suspending South Korea LCD Plant Due to Oversupply
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- Samsung’s Galaxy Fold Hits the US on September 27th
- Samsung Announces Galaxy Note10 & Note10+: A Redesign With Feature Disparity
Sources: Reuters, Mobile World Live, Dow Jones Newswires
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sorten - Wednesday, October 2, 2019 - linkWow, you guys picked the wrong year to skip the Microsoft Surface event. New Qualcomm and AMD custom chips, foldable Android phone, ARM powered Surface Pro.
I hope you get a chance to review some of these products.
liquid_c - Wednesday, October 2, 2019 - linkAnd what do all the things you just wrote got to do with the topic of this article? I mean, honestly, isn’t this *more* newsworthy?
abufrejoval - Wednesday, October 2, 2019 - linkAs soon as the people who build these personal computing devices can afford to own one, production must leave the country because labour becomes too expensive...
...what does that tell us about the sustainability of that business model?
I also wonder which life forms, if any, can survive in what they left behind, once the "relocated the equipment".
name99 - Wednesday, October 2, 2019 - linkThat one day assembling will move to robots; but it doesn't need to do so yet?
s.yu - Wednesday, October 2, 2019 - linkDefinitely a sensible move. The business environment in China was never friendly in the first place and a major incentive to produce there would be for the local market to avoid prohibitory taxes, if local sales are poor, there are better places for production.
Tams80 - Wednesday, October 2, 2019 - linkMore companies should be leaving that wretched country. Or rather it's wretched leadership. From a moral standpoint.
That there's economic incentive to do so is a big bonus.
artifex - Wednesday, October 2, 2019 - linkIt's moral to move to wherever the labor pool is more easily exploitable? ;)
s.yu - Thursday, October 3, 2019 - linkIt depends on the purchasing power of the currency. You should think of it as a win-win. Also where there's less brainwash.
abufrejoval - Thursday, October 3, 2019 - linkI am confused: Are you talking about the US now, or the UK?
GreenReaper - Thursday, October 3, 2019 - linkFirst one, then t'other.