Samsung Electronics will stop operations at considered one of its cell phone manufacturing crops in China, the corporate stated, as its gross sales on the planet’s most massive smartphone market slumps amid rising competitors from decrease-value native rivals.
The South Korean firm has seen its share of the Chinese language market shrink to 1 % within the first quarter of this year, shedding out to house-grown manufacturers like Huawei [HWT.UL], in line with market analysis agency Counterpoint, which pegs Samsung’s share of the pie at about 15 % at mid-2013.
“As a part of ongoing efforts to boost effectivity in our manufacturing amenities, Samsung Electronics has arrived on the troublesome choice to stop operations of Tianjin Samsung Electronics Telecommunication,” Samsung mentioned in a press release, referring to the plant in northern Chinese language metropolis of Tianjin.
The manufacturing facility, which at present employs about 2,600 individuals, is scheduled to be shut down by the top of this year. Samsung, the world’s largest smartphone maker, mentioned it might provide compensation packages to the workers and likewise present alternatives to switch to different Samsung services.
The corporate, which has been specializing in low-price nations like Vietnam and India for manufacturing, added it could proceed to function one other Chinese telephone manufacturing facility in Huizhou, within the southern province of Guangdong. “Samsung doesn’t want to remain in China due to rising labor value and its nearly non-existent Chinese market share.
They are often higher off in India and Vietnam,” mentioned Greg Roh, a senior analyst at Hyundai Motor Securities.
Samsung’s Tianjin plant produces 36 million cell phones a year, and the Huizhou plant makes 72 million models, whereas two of Samsung’s factories in Vietnam mixed to create 240 million items a year, following the South Korean newspaper Electronic Times.
Samsung declined to reveal the capability of every manufacturing facility. “China stays a necessary marketplace for Samsung, and we’re actively collaborating in China’s financial insurance policies by fostering development within the elements business,” Samsung stated.