Despite Revenue Boost by Galaxy S10, Samsung Shuts Production in China
Business, Markets

Despite Revenue Boost by Galaxy S10, Samsung Shuts Production in China 

Escalating labour costs, increasing competition and US-China trade war have negatively affected the market share of Samsung Electronics in China reducing it to a measly 1 percent. In an announcement made on Wednesday, Samsung disclosed its plans to shut down production in China.

Coming as a ray of hope, the launch of Galaxy S10 quadrupled Samsung’s market share since the beginning of 2019 going from 1 percent to 3.6 percent in the month of March. Fetching large amounts of revenue, the sales of Galaxy S10 helped get a hold on the falling position of the firm at a time when other mobile companies like Huawei, Oppo, Xiaomi are gaining market share despite the US-China trade war.

As per sources, Samsung’s last smartphone making plant, Huizhou in the Guangdong province of China was shut in June. Cutting production and jobs at the Huizhou plant had predicted the declining trajectory of the firm.

The factory built in 1992 produced a major share of Samsung in China housing more than 7,000 staff members who will soon be jobless. 

In order to compete with the ever increasing competition in the smartphone market, Samsung released variety of mid-range phones last year. The South Korean giant introduced new designs drawing customer attention to its mobile cameras. Also, serious efforts were made to understand customer needs with Samsung promising to make flagship features more accessible to users with Galaxy S10 and new Galaxy A-series.

Economic slowdown due to the US-China trade war is a major reason why multiple phone manufacturing companies are shifting their factory units from China. In recent news, another tech giant, Sony announced its plans to cease its smartphone plants in Beijing, only to shift all production to Thailand.

On the other hand, Apple will still continue with its production in China.

Commenting on the lost market share of Samsung an analyst at Cape Investment & Securities, Park Sung 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”.

Without giving further information on the issue, Samsung said, “The production equipment will be re-allocated to other global manufacturing sites, depending on our global production strategy based on market needs.”

The launch of Galaxy S10 has increased revenue of Samsung in lower-cost countries like India and Vietnam giving hope for a better future there.

Related posts