Samsung Will No Longer Make Smartphones In China: 3 Reasons Why This Happened?
At one time, not too long ago, South Korean business conglomerate Samsung was World’s biggest mobile phone maker, and 15-20% of all Samsung mobiles were made in China.
But that era has now ended, as Samsung has finally closed down their last factory in China, and have quit manufacturing from China.
This marks an end to Made in China era and a big, massive set back to the Chinese manufacturing growth story.
Samsung Stops All Chinese Manufacturing Units
Samsung has decided to close down their Huizhou factory, which was the last factory from where they were manufacturing smartphones.
This way, Samsung’s entire Chinese manufacturing has closed down.
In a statement, Samsung said, “As part of our ongoing efforts to enhance efficiency in our production facilities, Samsung Electronics has arrived at the difficult decision to cease operations of Samsung Electronics Huizhou.”
Last year, Samsung had closed down their factory in Tianjin, and then few months back, they shut down one of their biggest factories in Huizhou.
Yesterday, they announced the closure of their last factory in Huizhou.
3 Reasons Why Samsung Quit China
- Samsung’s market share in China had reduced to 1%, which is quite shocking. Brands like Xiaomi, OnePlus, Huawei, Oppo have captured the market from all possible angles, and there is nothing left of Samsung to fight. In 2013, Samsung had a market share of 15% in China. This made no sense for Samsung to continue their manufacturing in China. Instead, they are ramping up manufacturing in countries like India and Thailand. And the reason is here..
- Labour costs in China is gradually increasing, and the time has arrived where manufacturing in China makes no more sense. Instead, companies like Apple, Xiaomi and Samsung was increasingly ramping up manufacturing in India and Thailand, Vietnam and other Southeast Asian countries, which helps in two ways: saving money in manufacturing, and spending less money catering to the domestic demand. In China, both of these factors are missing.
- The ongoing trade war between US and China is another reason, which may have led to Samsung quit Chinese manufacturing. Both US and China have triggered trade war, by imposing higher import duties and taxes on one another’s imports and exports, and this has scared the manufacturing companies. No one can afford such hostility right now.
We will keep you updated, as more details come in.