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Samsung ends smartphone manufacturing in China

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Samsung has confirmed to Reuters that it has shut down its final smartphone manufacturing operation in China.

In June, Samsung began requesting voluntary layoffs at its Huizhou manufacturing plant amid a slowdown in production and rumours that the plant was due to be shut down. While Samsung remains the largest global smartphone provider, the company has faced intense competition in the Chinese market as a wide range of smartphone options from Xiaomi, Huawei and Oppo have grown in popularity among customers.

According to Counterpoint Research, Samsung’s share of the Chinese market has shrunk from 15 per cent in mid-2013 to 0.8 per cent in 2018 and 1.1 per cent in early 2019, sandwiched awkwardly between budget and luxurious flagship phones.

“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,” Park Sung-soon, an analyst at Cape Investment & Securities, told Reuters.

Reuters has confirmed that Samsung’s Huizhou plant has closed after almost 30 years of production. According to South Korean media sources, the factory produced 63 million units in 2017. The Huizhou plant was Samsung’s last in China following the closure of its Tianjin plant in December 2018 and its Shenzhen plant in April 2018. Manufacturing has shifted towards other Southeast Asian countries, with Vietnam alone contributing approximately 40 per cent of Samsung’s global smartphone production.

Samsung told Reuters in a statement: “The production equipment will be re-allocated to other global manufacturing sites, depending on our global production strategy based on market needs.”

Despite the closure of the plant, Samsung will continue to pursue smartphone sales in China.

A number of electronics manufacturers are also choosing to shift their manufacturing from China amid rising labour costs (the average monthly wage in Huizhou has inflated from ¥1,894 in 2008 to ¥5,620 in 2018), an economic downturn and uncertainties about the mounting tech-focused trade war with the US.

In March, it emerged that Sony would also be moving all of its smartphone production from its Beijing plant to Thailand. Japanese brands Ricoh and Asics have also shifted production away from China, while Microsoft and Nintendo have expressed concerns about continuing manufacturing in China amid the ongoing trade war.

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