Samsung Closes the Production of Smartphones in China
OREANDA-NEWS Samsung Electronics Co. in the next two weeks, plans to close the Chinese factory for the production of smartphones. This is being done as part of an effort to reduce costs, while the South Korean technology giant is moving production to India, and its sales in China, the world's largest mobile device market, have stalled, according to Dow Jones.
As the company representative said on Thursday, Samsung will close the factory in Tianjin, a Northern port city near Beijing by December, 31.
The decision to close the factory does not seem to be related to the us efforts to convince its allies, including South Korea, to limit ties with China in the technology sector amid the escalation of geopolitical confrontation with the Chinese telecommunications giant Huawei Technologies Co., which is a serious competitor of Samsung.
About 2,000 Samsung employees were notified this week of the closure of a factory in Tianjin, where analysts estimate that the company collects nearly one-third of all phones produced in China. The second smartphone factory of Samsung, the world's largest smartphone manufacturer, is located in southern China in Huizhou.
"China remains an important market for Samsung," the company said in a statement, promising that the company will continue to invest in Chinese factories. Samsung and its affiliates manufacture batteries, memory chips, and other electronics components in China.
Five years ago, Samsung controlled almost one fifth of the Chinese smartphone market, which is characterized by fierce competition. But since then, its market share has steadily declined and now, according to Counterpoint Research, is less than 1%
These Chinese competitors such as Samsung, Huawei and Xiaomi Corp., win back her business due to the fact that they offer a lot of phones with similar characteristics, but at lower prices.
Although the closure of the Tianjin factory does not seem to be related to the US-China dispute over Huawei, the decision was made just when companies like Samsung are trying to cope with the increasing friction between the two major world economies. Potential tariffs and geopolitical concerns could affect foreign firms like Samsung, with large-scale production in China.