Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Samsung admits defeat in China's vast smartphone market

Samsung admits defeat in China's vast smartphone market

Just a few years ago, one in every five smartphones sold in China was made by Samsung. How times have changed.
The smartphone maker said this week it was shutting down its last phone factory in the country in the southern city of Huizhou. Its share of the vast Chinese market has collapsed and labor costs have risen. The world's largest smartphone maker is now setting its sights on more promising markets.

"As part of ongoing efforts to enhance efficiency in our production facility, Samsung Electronics has arrived at the difficult decision to cease operations of Samsung Electronics Huizhou," it said in a statement on Thursday. The South Korean firm declined to share more details, including when exactly it was shuttering its operations and how many employees worked at the plant.

At its peak, the plant was Samsung's biggest in China, producing a fifth of all smartphones sold in the country, according to the South China Morning Post.

Speculation had been mounting that the facility would close. Last month, the factory posted recruitment notices for 13 other companies on its official WeChat account, suggesting followers should look at other job postings.

On Thursday, local news website Zhiwei Tech posted a video on Chinese social media platform Weibo that appeared to show workers signing up to get a free Samsung phone. The phone was intended as a parting gift for employees who had been with the factory for more than 10 years, the outlet reported. Samsung declined to comment on the matter.

The move came after years of lackluster sales in China that were hampered by several factors. As of the first quarter of this year, Samsung (SSNLF) accounted for just 1% of the Chinese smartphone market, according to Counterpoint Research.

The company's share of the Chinese market had declined steadily since late 2016, when it suffered a sharp drop-off in demand because of the exploding Galaxy Note 7 crisis. Samsung's delayed response to that situation led to a severe loss of consumer confidence, said Flora Tang, a research analyst at Counterpoint.

Prior to the crisis, Samsung was the one of the country's top five smartphone vendors, and in 2013 accounted for around 20% of the Chinese market, she added.

The world's biggest smartphone maker also lost out as local competition grew. Over the last few years, homegrown players such as Huawei, Oppo, Vivo and Xiaomi have become more popular, and they have "grabbed [market share] from Samsung with their strong product portfolio, affordable prices, more localized services ecosystem and extensive sales channels," said Tang.

China's smartphone market has also stalled in recent years, suffering its first ever annual decline in 2017 and its worst contraction in six years in the first quarter of 2019.

Now Samsung is expanding its manufacturing efforts in emerging markets, where it can benefit from lower costs such as cheaper labor. Around 60% of Samsung's smartphones are now made in Vietnam, according to research firm Canalys.

Another big growth frontier for the Korean tech firm is India, the world's second-biggest smartphone market. Samsung was the top seller there for years until it was leapfrogged by Xiaomi, sending both players into a tight race for the top spot.

Last year, Samsung opened what it called "the world's largest mobile factory" in Noida, a city near New Delhi, which the company said would help it nearly double its annual capacity in the country.

Closing down the Chinese plant is a good option for the company to minimize its losses and shore up profitability, said Tang. "Its smartphone businesses in [Southeast Asia and] India appear more positive than that in China."
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
×