Samsung Electronics announced that it will cease operations at one of its mobile phone manufacturing plants in China, owing to poor sales in China amid rising competition from lower-cost local rivals. Samsung has witnessed its shares in China shrink to 1 percent in the Q1 2018 of this year
The company is losing its share to home-grown brands like Huawei. According to Counterpoint market research firm, Samsung’s share in China was around 15% at mid-2013. The factory currently employs about 2,600 people and is scheduled to be shut down by the end of this year.Samsung said that it would offer compensation packages to the employees and also provide opportunities to transfer to other Samsung facilities.
The company of late has been focusing on low-cost countries like Vietnam and India for production. The company would continue to operate another Chinese phone factory in Huizhou, in the southern province of Guangdong. Samsung’s Tianjin plant produces 36 million mobile phones a year and the Huizhou plant makes 72 million units, while two of Samsung’s factories in Vietnam combined make 240 million units a year.
Samsung in a statement said:
As part of ongoing efforts to enhance efficiency in our production facilities, Samsung Electronics has arrived at the difficult decision to cease operations of Tianjin Samsung Electronics Telecommunication. China remains an important market for Samsung and we are actively participating in China’s economic policies by fostering growth in the components industry.