China, Samsung ends production of mobile phone

Samsung Electronics Co Ltd has completed mobile phone manufacturing in China, it said Wednesday, marred by intensified competition from domestic rivals in the world’s largest smartphone market.

The closure of China’s latest phone factory in China comes after it stopped production at the plant in the southern city of Huizhou in June and suspended another plant late last year, underscoring fierce competition in the country.

The stalled production of South Korean tech giant phone in China follows other manufacturers shifting production from China due to rising labor costs and economic slowdown.

Sony also said it was shutting down the Beijing smartphone factory and would only make smartphones in Thailand.

But Apple (O: AAPL) still makes key products in China.

Samsung’s share of the Chinese market shrank to 1% in the first quarter from about 15% in mid-2013 after losing out to fast-growing home brands such as Huawei Technologies and Xiaomi Corp (HK: 1810), according to market research The counterpart of the firm.

“In China, people buy low-priced smartphones from domestic brands and high-end phones from Apple or Huawei. Samsung has little hope there to revive its stake,” said Park Sung Soon, an analyst at Cape Investment & Secures.

Samsung, the world’s best smartphone maker, said it had made the difficult decision to try to increase efficiency. She added that however, sales in China will continue

“Production equipment will be distributed to other global manufacturing countries, depending on our global production strategy based on market needs,” she said in a statement, without elaborating.

Samsung declined to specify the capacity of the Huizhou plant or the number of its staff. The factory was built in 1992, according to the company.

South Korean media said it hired 6,000 workers and produced 63 million units in 2017.

That year, Samsung produced 394 million handsets worldwide, according to its annual report.

The company has expanded smartphone production to lower-cost countries, such as India and Vietnam, in recent years./

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