Samsung shuts down mobile phone production in China
In the smartphone world, China has long been known as the production hub, where smartphone OEMs eventually turn to for mass-producing components for their smartphones. This focus was driven majorly by the cheaper labor costs and easier and abundant availability of other factors of production. The situation has gradually changed over the years, with China no longer being the absolute prime location it once used to be, mainly because of rising labor costs and a shift in production economics unfavorably in China and favorably in other locations in the world. A new report from Reuters lends more weight to this change, as it reports that Samsung has stopped mobile production in China.
According to Reuters, Samsung has shut down its last factory in China. This move comes after the company had suspended another factory last year, and had cut down on the production of this particular factory located in the southern city of Huizhou in June. Samsung declined to specify the Huizhou plant’s capacity or its numbers of staff. The factory was built in 1992, according to the company.
Samsung’s decision to shut down production comes in light of the stiff competition from domestic companies like Huawei in China. Samsung’s share in the Chinese market has been on a decline for quite a while: the company had slipped to the sixth position in Q2 2017, with only a 2.2% market share left by the end of 2017. This market share now stands at just 1% in Q1 2019 thanks to competition from Huawei and Xiaomi, which is a far cry from the 15% market share Samsung enjoyed back in 2013.
This difficult decision from Samsung is said to be taken with a view to boosting overall efficiency. Samsung will continue selling smartphones in China, and production duties have been handed over to lower-cost regions like Indian and Vietnam. Production equipment from the Huizhou plant will be re-allocated to other global manufacturing sites, depending on the company’s global production strategy based on market needs.