Samsung closes last smartphone factory in China as sales struggle continues
Samsung is currently the world’s largest smartphone manufacturer yet, regardless of how hard it tries, it simply cannot crack the Chinese market. Around ten months ago the Seoul-based company was forced to close a factory in China due to weak sales locally and earlier this summer it scaled back production at its remaining facility. Now, things seem to have taken a turn for the worse.
Samsung’s ending all smartphone production in China
After a report published yesterday claimed the company was in the process of closing down its last smartphone factory in China, Samsung has today confirmed to Reuters that it halted all production “at the end of September.” The “difficult decision” was made in a bid to boost efficiency in China as its local smartphone business failed to show signs of growth.
Samsung confirmed all “production equipment will be re-allocated to other global manufacturing sites, depending on our production strategy based on market needs.” It didn’t elaborate any further but this could mean smartphone output in both India and Vietnam will see a slight boost soon.
For reference, earlier reports suggest that out of the 300 million smartphones Samsung’s expected to ship this year, 24-to-40 million units could be manufactured by an ODM. In an ideal world, most of these units would be sold in China but the state of Samsung’s local business means this simply isn’t the case.
Samsung still can’t compete with Xiaomi, Huawei, or Oppo
At its peak in 2013, Samsung held a very respectable 20% of the Chinese smartphone market. But as low-cost and homegrown rivals such as Xiaomi, Huawei, and Oppo began to emerge things quickly turned sour.
By 2016 Samsung held just 4.9% of the local market and things got even worse the following year when this number dropped to 2.1%. Throughout most of 2018, Samsung struggled to maintain a 1% market share but it did receive a slight boost in early 2019. Following a successful Galaxy S10 launch, Samsung’s share jumped back to 1.1% but during the following three months it decreased to just 0.7% as sales slumped to 700,000 units.
Huawei continues to eat up Samsung’s remaining share
The most recent developments mean Samsung is no longer the sixth-largest smartphone manufacturer in China behind Apple. Local brand Meizu now occupies this position and Samsung now falls under the ‘Others’ category, although it presumably sits in seventh-place overall.
Results for Q3 2019 are likely crucial for Samsung
Market share and sales figures for the July-September quarter haven’t yet been published but the results could be crucial to Samsung. During the period, the company released the Galaxy Note 10, Galaxy Note 10+, and Galaxy Note 10+ 5G which have reportedly been doing quite well. In fact, sales are said to have “skyrocketed” in comparison to those of the Galaxy Note 9 in China.
Ultimately, only time will tell if Samsung can find a way to regain its market share in the Chinese market. But this year it seems to have tried everything and, if Q3 2019 sales disappoint, there’s no denying the future for the brand is certainly looking bleak in China.