To have price-competitive smartphones, manufacturers must produce these devices on China, right? Not necessarily: today, some companies are giving priority to countries like Thailand and India. This is the case Samsung that recently decided to completely stop the production of its cell phones in Chinese territory.
It is a movement that started not long ago. In late 2018, Samsung ended operations at a factory it maintained in Tianjin and, in the middle of this year, stopped part of the production of a factory in Huizhou, southern China. Now, this last unit has closed its doors for good.
With the most recent decision, Samsung is abandoning the production of smartphones it maintained in Chinese territory. The reason? Labor costs in China have soared that the country has become less attractive to large corporations.
In addition, fierce competition with Chinese brands (such as Xiaomi, Huawei and OnePlus) has made Samsung’s share of the Chinese smartphone market plummet from 15% in 2013 to 1% today.
Another factor that may have influenced Samsung’s decision is the commercial tension between the United States and China: certain products manufactured in the Asian country may suffer additional tariffs when they arrive in American territory.
These factors do not weigh against Samsung alone. Proof of this is that, recently, Sony decided to close the factory it had in Beijing and, since then, has been producing smartphones in Thailand.
In the case of Samsung, the company will produce smartphones mainly in the factories it owns in India and Vietnam. Equipment used in Chinese production lines was even transferred to these units.
This does not mean that Samsung is giving up on marketing smartphones in China, at least not yet. Although the company does not expect to increase its participation in this market, sales in the country will be maintained. It just wasn’t clear whether this will be valid until the end of local stock or if the brand’s cell phones will be imported.