Samsung is closing its last mobile phone factory in China amid slowing smartphone sales and rising manufacturing costs that have seen numerous vendors exit the country.
According to local media reports, the Huizhou site employs 6,000 people and produced 63 million handsets in 2017. The company had already shut down its largest production facility in Tianjin late last year.
The Korean mobile giant told Reuters that it had taken the decision to boost efficiency but vowed to continue sales in the world’s largest smartphone market.
“The production equipment will be re-allocated to other global manufacturing sites, depending on our global production strategy based on market needs,” Samsung was quoted as saying.
Samsung’s sales have been impacted by intense competition from local manufacturers and a general slowdown in mobile phone sales.
The company has a fifth of the Chinese market in 2013, but consumers in the country are extremely price-conscious and there is little brand loyalty. This means that competitively priced, feature-packed phones from Huawei, Xiaomi and OnePlus have eroded Samsung’s share to one per cent.
Additionally, manufacturers have been concerned about an economic slowdown in China, rising labour costs, and ongoing trade tensions between the US and China. Sony shut down a facility in Beijing earlier this year, moving production to Thailand.
Apple is also looking to diversify its supply chain. The company has long relied on China for the rapid assembly of its devices and the manufacturing of components but reportedly fears the ongoing trade dispute between Beijing and Washington means the risks of such dependence are too great.
It is thought that between 15 and 30 per cent of activities could be moved to other countries, with India, Indonesia, Malaysia and Mexico among the candidates. However it would take several years to move even a portion of production away from China given the complex ecosystem that has been established there.
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Via Reuters (opens in new tab)