Samsung Electronics Co Ltd has ended its production in China caught between the competition from cheap and domestic brands of the company.
Now, the world’s largest smartphone manufacturing company is planning to expand its base in India.
The shutdown of Samsung’s last China phone factory comes months after it cut production at the plant in the southern city of Huizhou in June and suspended another factory last year, underscoring competition in the country.
According to sources, Samsung’s share of the Chinese market shrank to 1% in the first quarter from around 15% in mid-2013, as it lost out to fast-growing homegrown brands such as Huawei Technologies and Xiaomi Corp.
Park Sung-soon, analyst at Cape Investments and Securities said “In China, people buy low-priced smartphones from domestic brands and high-end phones from Apple or Huawei. Samsung has little hope there to revive its share,”
Smartphone shipments in China fell 9 percent year-on-year and grew 10 percent quarter on quarter during Q2 2019.
Samsung said it made a difficult decision in a bid to boost efficiency.“The production equipment will be re-allocated to other manufacturing sites, depending on global production strategy based on market needs,” it said in a statement.
Sony also said it was closing its Beijing smartphone plant and would only make smartphones in Thailand. But Apple still makes major products in China.
The shutdown will have a huge impact on the jobs.Samsung declined to specify the Huizhou plant’s capacity or its numbers of staff. The factory was built in 1992, according to the company. The company said it employed 6,000 workers and produced 63 million units in 2017.That year, Samsung manufactured 394 million handsets around the world.
It is said that, due to China’s rising labor costs and economic slowdown many companies are likely to shift their facilities.
Other smartphone manufacturers like Vivo, Oppo have expanded their manufacturing facilities in India in last few years. India has overtaken the United States of America to become the 2nd largest manufacturer of Smartphone in the world in 2017.
Recently, one plus inaugurated its Hyderabad facility and its co- founder Pete Lau spoke on the slowing Chinese market.
Pete Lau said, In terms of size, China is still the biggest market globally. According to data for this year, there has been a decrease in sales. A lot of users don’t seem to have enough willingness to change their phones.
According to reports, In 2014, there were only 2 manufacturing units in India but since the launch of Make in India, the number has increased to 123 units in 2017.
The reason behind companies moving its facilities to India is due to its rising per capita income and the prosperity. Also various measures taken by Modi government to attract companies to India under the Make in India initiative is commendable.
It is said that India has a strong ecosystem for software industry but when it comes to hardware, it is still in its budding stage. Once the hardware industry becomes strong, both software and hardware can be integrated to develop new range of products to export.