Samsung mulls suspending operations at China mobile phone plant

Judy Cobb
August 15, 2018

"The smartphone market is having difficulties due to slowing growth".

The company is considering whether or not to suspend its smartphone manufacturing at its Tianjin plant in China, reports Reuters. Samsung Electronics' Tianjin telecom enterprise has got the objective of focusing on the activities that may lead to an increase in efficiency and competitiveness.

Just five years ago, Samsung had 20 percent of the Chinese market only to see that fall to less than 1 percent this year, outgunned by Huawei [HWT.UL], Xiaomi (1810.HK) and other Chinese brands, particularly on pricing. The reasons given by the South Korea news outlet, Electronic Times, are that smartphone sales are dropping, and labour costs are rising. The firm has already informed the plans to key suppliers.

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With Samsung losing its market share to Chinese runner-ups in recent years, the plant's sales also tumbled to 11.41 trillion won in 2014 and 6.93 trillion won in 2015.

The Tianjin factory is one of two in China, according to Reuters, and makes 36 million phones a year.

The factory in Tianjin was set up in 2001 back when Samsung made its big push in China. "Samsung says there will be no more orders from Tianjin", a source told ETNews, adding that "That means suspending production there". It opened the world's biggest smartphone factory outside New Delhi last month, which is slated to become an export hub. With a focus on smart technologies in its smartphones, the Samsung had expanded its investments in factories located in Vietnam and China. "But we have not yet decided on its shutdown", said a Samsung executive who also wished to be unnamed.

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