Briefing: Outpaced by Chinese brands, Samsung shutters Tianjin phone plant

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Samsung to shut Tianjin mobile phone factory as its Chinese market share slumps and manufacturing costs rise – SCMP

What happened: Following media reports that workers had been given notice, Samsung officially announced on Wednesday that its Tianjin manufacturing plant in northern China will shut down. The factory employed some 2,600 people as of last month, who will each receive a “reasonable compensation package.” After the Tianjin plant closes, Samsung will have just one phone factory on the mainland, in Huizhou, Guangdong province.

Why it’s important: Since the early 2010s, Samsung’s share in the China phone market has shrunk dramatically. Its fall came as a result of the rise of domestic brands such as Huawei and Xiaomi, as well as lesser-known, cheaper competitors. In combination with rising labor costs in China, it seems like a natural move for Samsung to reduce its local operations, even if “China remains an important market” for them. Instead, Samsung’s manufacturing may move overseas to countries such as India, where the company opened the world’s largest phone plant this past July.