Samsung Electronics is forced to close its manufacturing facility in Tianjin in the face of sliding smartphone market share in China, reported 36kr. Meanwhile, the plants in Huizhou will continue handset production.
The Tianjin factory, which employs 2000 personnel, also manufactures electronic devices. Samsung will provide compensation packages and also transfer the staff to other plants after the closure of Tianjin facility by December 31.
In the wake of stiff competition from local brands such as Huawei, Xiaomi and OPPO, Samsung’s market share dropped to 0.9% in the first quarter of 2018.
Samsung had plans to cease operations of Tianjin Samsung Electronics Telecommunication due to China’s soaring labor cost, South Korean newspaper Electronic Times reported in last August.
Samsung decided to move most of its smartphone production to countries like India and Vietnam to stay competitive in the global market.
“Low-cost countries could be a better place to enhance efficiency in production facilities. Vietnam now is the largest hub accounting for 40% of our output in 2018,” Samsung said in a statement.
Armed with a diverse product line ranging from low-priced electronic devices to high-end handsets, Samsung made inroad into China's smartphone market in 2010.
Tianjin plant was the mainstay of Samsung in 2013 when it was reeling in USD 13.3 billion a year in sales at 20% market share, Electronic Times reported.
Samsung now operates 10 subsidiary companies in Tianjin, manufacturing flagship products including LCD TVs, OLED displays, ceramic capacitors, and lithium-ion batteries.
On December 9, Samsung announced plans to make an investment of USD 2.4 billion in a new global project, set up an automotive MLCC (multilayer ceramic capacitor) factory and to establish world’s leading battery production line in the city.
Blowing hot and cold
Samsung has been facing the heat in Chinese smartphone market from 2015 when local players like Huawei started upping the ante. However, the flash point came in August 2016.
Just 10 days into debut, reports of exploding Galaxy Note 7 poured in from across the world. 35 instances were reported from China alone.
In September 2016, Samsung recalled the handsets in ten markets except China - much to the ire of Chinese government and users.
When Samsung launched Galaxy s8 in 2017, China decided to give it the cold treatment. Samsung’s share fell from 12.8% to 7.7% in a year and slid below 2% in the fourth quarter of 2017.
The company is not ready to cave in just yet. All told, the world’s largest smartphone market is nothing to be sneezed at. On December 10, the South Korean conglomerate announced flagship handset Galaxy A8s in Beijing.
“China is of primary importance for us and we are actively engaged in fostering growth in the country,” according to Samsung’s statement.