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Samsung to close its last smartphone factory in China
34704708 - melbourne australia - december 13, 2014: samsung korean electronics

Samsung to close its last smartphone factory in China

In its heyday, Samsung’s complex in Huizhou in the northern part of the Pearl River Delta was the South Korean company’s largest Chinese factory, producing one in five smartphones sold in China in 2011.

Now, the small shops and suppliers that surround the vast complex – the focal point for the community for 27 years – have fallen silent. A notice posted on the gate, dated February 28, tells passersby that recruitment has been suspended.

“Actually, since February after the Chinese Lunar New Year, many – and a growing number – of residents of the [nearby] town of Chenjiang, from businesspeople, hawkers, workers, landlords, to security guards at nearby electronics factories have heard and spread the rumours that Samsung will shut down a large part of its production capacity in the coming months,” says Zhong Ming, a local resident in his 40s who has witnessed the rise of the Samsung factory over the last three decades.

Huizhou Samsung Electronics is Samsung’s last smartphone factory in China after the company closed its facility in Tianjin in December, having already ceased network equipment production earlier in 2018 at its factory in Shenzhen.

Workers in Huizhou talk of colleagues having already accepted voluntary redundancy, while other local residents, workers, and suppliers have almost taken it for granted that the factory will close.

“Streetlamps here were decorated with Samsung’s eye-catching billboards. Now, they are all gone,” says Steve Huang, an engineer who has worked at the plant for 17 years.

Huang is understandably concerned about his own job security, as he says the number of employees at the factory has dropped to about 4,000 from about 9,000 in 2013, when Samsung ranked No. 1 in China with 20% of the smartphone market.

Last year, its market share dropped to just 1% in the face of stiff competition from Chinese rivals like Huawei, Xiaomi, and Oppo.

The factory was born on August 24, 1992, four days before the establishment of diplomatic relations between China and South Korea, as the electronics giant signed a joint venture contract with the Huizhou city government.

A year later, the company with registered capital of US$32 million began operation, and since then has produced the company’s latest and most popular consumer electronics, from stereos in the 1990s, MP3 players in the early 2000s, and smartphones since 2007.

In 2011, when Samsung’s smartphone sales ranked No. 1 in the world, its two factories in Huizhou and Tianjin produced and exported 70.14 million and 55.64 million mobile phones, respectively.

“Last month, I heard that a few hundred workers got compensation of between about 10,000 (US$1,400) and over 100,000 yuan (US$14,400) [depending on years of service] and left Samsung,” says a local landlord. “The rent for a single room has dropped from 500 (US$72) yuan to only 200 or 300 yuan but they are still vacant.”

Samsung China declined to comment despite reports in both Chinese and South Korean media last week that the company was cutting production and laying off workers at the Huizhou factory amid slowing smartphone sales as it continues to shift production to lower-cost locations in Asia.

In the first quarter of 2019, exports of Samsung smartphones from Huizhou dropped 20.1% from the same period last year, according to Chinese customs data.