Samsung has officially ended its production of smartphones in mainland China. The South Korean company announced on Wednesday that it will be shutting down its last smartphone manufacturing facility in the country due to the intensifying competition in the market from domestic players.
The shutdown of the company's manufacturing facility in the world's largest smartphone market comes just months after it had cut activity in its production plant in the southern city of Huizhou in June. This was also preceded by the suspension of another factory late last year.
Samsung had stated that increasing competition was the main reason for the shutdown. However, the company may have decided on the measure for the very same reason other manufacturers have shifting production from China.
Sony made a similar move just recently by closing its last smartphone manufacturing facility in Beijing. The company stated that the reason for its decision was the rising labor costs in the country and its continued economic slowdown brought about by its ongoing trade dispute with the United States.
Other foreign manufacturers, however, have chosen to stay. US tech giant Apple for example still produces a majority of its components in China. According to analysts, higher-end brands such as Apple and Huawei still have a lot of consumers in China.
Lower end products from domestic brands are also very popular for those who are looking for smartphones on a budget. Samsung, on the other hand, is losing a lot of market share as mid-end buyers are shifting either up or down to higher-end products or low-cost alternatives.
According to market researchers, Samsung's market share in China has steadily been declining over the last few years. In 2013, the company held an estimated 15 percent of the Chinese smartphone market. By the first quarter of this year, the company only held an estimated 1 percent of the market. One of the main reasons for its loss of market share is the rise of popular homegrown brands such as Xiaomi and Huawei.
While it is shutting down its manufacturing facilities in China, Samsung clarified that it will not be exiting the market as a whole. The company stated that it will continue to sell its products in China. In a prepared statement, Samsung explained that it will be relocating its production equipment to other global manufacturing sites.
The company's last factory in Huizhou was originally built in 1992. South Korean reports have stated that the factory had employed around 6,000 workers and had produced over 63 million smartphones from 1992 to 2017.
