Samsung Electronics will stop operations in one of its cell phone production plants in China, the business stated, as its earnings in the planet’s largest smartphone market slumps amid increasing competition from lower-cost regional competitions.
The South Korean firm has seen its own share of the Chinese marketplace psychologist to 1 percent in the first quarter of the season, dropping out to high-street brands such as Huawei, based on market research company Counterpoint, that pegs Samsung’s share of this pie at roughly 15 percent in mid-2013.
“As a part of continuing efforts to boost efficiency in our manufacturing centers, Samsung Electronics has arrived in the challenging decision to cease operations of Tianjin Samsung Electronics Telecommunication,” Samsung stated in a declaration, referring to this plant from northern Chinese city of Tianjin.
The mill, which now employs approximately 2,600 people, is scheduled to be closed down from the end of the season.
Samsung, the world’s largest smartphone manufacturer, said it could provide compensation packages to the workers and provide opportunities to move to other Samsung facilities.
The organization, which was focusing on low-cost nations such as Vietnam and India for manufacturing, additional it might continue to run yet another Chinese telephone factory in Huizhou, at the southern province of Guangdong.
“Samsung does not need to remain in China due to increasing labour price and its nearly non-existent Chinese market talk. They could be better off in India and Vietnam,” stated Greg Roh, a senior analyst at Hyundai Motor Securities.
Samsung’s Tianjin plant generates 36 million cell phones annually along with the Huizhou plant produces 72 million units, while two of Samsung’s factories in Vietnam united make 240 million units per year, according to the South Korean paper Electronic Times.
Samsung declined to disclose the potential for every mill.
“China remains a significant marketplace for Samsung and we’re actively engaging in China’s economic policies by boosting growth in the parts sector,” Samsung said.