Samsung said it had ended the production of mobile phones in China because it was hit by competition from local companies in the world’s largest smartphone market.
The closure of the last factory where Samsung produces smartphones in China comes after the company cut production at its plant located in the southern city of Huizhou last June, and had previously stopped another factory late last year, confirming the intensification of competition in the country.
Samsung, the world’s biggest smartphone maker, has stopped production in China after other companies moved production from China because of rising labor costs and an economic slowdown. One of those companies, Sony Japan, which also said: “It will close its smartphone factory in China to the industry in Thailand. Apple still produces most of its devices in China”.
Samsung’s share of the Chinese market shrank to 1% in the first quarter of this year, compared with about 15% in mid-2013, as it lost that share to fast-growing domestic brands such as Huawei and Xiaomi, according to market research firm CounterPoint.
According to analysts, consumers in China prefer low-priced smartphones produced by local companies, while leading phones prefer Apple and Huawei phones, so Samsung’s chance to revive its position there is slim.
Samsung said it had made the difficult decision to try to boost efficiency. It said it would continue sales in China. “Production equipment will be reallocated to other global manufacturing sites, based on our global production strategy based on market needs,” the company said in a statement.
Samsung founded the last plant it would close in China in 1992, employing 6,000 workers and producing more than 63 million units in 2017. Samsung produced 394 million devices worldwide this year. Annual Report.
Samsung has in recent years turned to production in low-cost countries such as India and Vietnam.