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Samsung will cease its mobile phone plant in China

Samsung to shut down one of its mobile phone plants in Tianjin, China due to its sudden decrease in sales.

Samsung is a South Korean multinational conglomerate founded by Lee Byung-Chul in 1938.  Samsung was the world’s biggest smartphone maker, but it’s not always good news for the South Korean company as they suffer from a slump in sales in China’s market.

The company said in a statement that as part of ongoing efforts to enhance efficiency in their production, facilities, Samsung Electronics has arrived at a difficult decision to cease operation of Tianjin Samsung Electronics Telecommunication.

Samsung will be offering compensation packages to 2,600 employees in Tianjin factory and will provide them opportunities to transfer to other Samsung facilities. The factory was scheduled to shut down by the end of the year.

According to Greg Roh, a senior analyst at Hyundai Motor Securities, Samsung doesn’t need to stay in China because of the rising labor cost and its almost non-existent Chinese market share. They can be better off in India and Vietnam, he further added.

The said Samsung facility in China produces at least 36 million mobile phone a year. Even though China’s plant will shut down, Samsung will still continue to operate in another phone factory in Huizhou, Guangdong.

Samsung refuses to disclose the capacity of each factory but said that China remains an important market for them and they are actively participating in China’s economic policies by fostering growth in the components industry.