Huizhou Samsung Electronics, the final factory and assembly of Samsung technology group in China, will be officially closed this year. This move of the kimchi conglomerate will have a significant impact on the economy of the billion-dollar country, forcing them to reluctantly accept the title of "the world's factory" that has been so hard to build for years. is gradually falling into the hands of others.
August 1992 marked a strong turning point in relations between China and South Korea – the two countries that were once "enemies" – by establishing normalization of diplomatic relations. . Also during this time, Huizhou Samsung Electronics, China's largest mobile phone factory in the country of Kim Chi, also started to build the first foundation, the result of efforts. force signed a joint venture contract between the Korean tech giant and the Beijing government.
Just one year later, the $ 23 million capitalization company began operating with the goal of becoming the leading manufacturer of the most popular and modern consumer electronics devices, from The creation of steoreo audio technology in the 1990s, MP3 player in the early 2000s and began to set foot in the smartphone market since 2007.
2011 witnessed the heyday of Samsung Electronics Group, when their smartphone sales led the world market, with 70.14 million units produced in Hue Chau, accounting for 20% of smartphone output. consumed in China and 55.64 million units in Tianjin.
However, now, the spectacle of a bustling and vibrant complex like the years of 2010 and 2011 has become a thing of the past, instead there is a large space with a wild, gloomy, gloomy part. Small shops and groceries around the factory with many people who used to travel before are now closed, even the street lights – which are decorated with Samsung's eye-catching billboards – are now has completely disappeared. And the bulletin board was posted on the factory entrance and declared a halt from February 28.
"In fact, since the Lunar New Year, people all over this Zhejiang region have been whispering rumors that Samsung will limit most of the factory's production activities in the coming months.", Mr. Zhong Ming, a local resident, shared.
Workers at the Huizhou factory said some of their colleagues had automatically quit their jobs to find a new direction, while locals, workers and suppliers almost accepted the job. It's true that the factory will be closed in the future.
"Last month, I heard that hundreds of workers received a compensation of between 1400 and over 14,400 US dollars (based on the number of years of service) and left Samsung.", a landlord in the factory area, shared.
The rent for a single room has plummeted in the past few months, from 500 yuan ($ 72) to only 2-300 yuan (about $ 36), but the current vacancy still a lot.
Steve Huang, an engineer who has worked here for 17 years, said the number of employees inside the factory has decreased by more than half, about 4000 compared to the number of 9000 in 2013, when Samsung was a corporation. ranked first in China with 20% of smartphone market share. However, after only 5 years, the group retained only 1% of the market share, when the fertile "smartphone piece" was torn by Chinese domestic corporations like Huawei, Xiaomi and Oppo.
According to data from China Customs, just in the first quarter of 2019, Samsung's mobile phone exports from Huizhou dropped by 20.1% over the same period last year.
The collapse of Samsung China is raising a great concern about the future of the world's number one economy, and raises questions about the financial strength of the country in the future, when it is closing. The role of global supply chain of goods, especially at the present time, has not come to an end.
As for Samsung, they should also take a part of the responsibility for losing smartphone market share to Chinese domestic brands due to poor marketing and service policies. However, in fact, the company is closing factories in China but expanding its production scale in Vietnam and India, which is also an issue that the government of Xi Jinping needs to pay attention to.
Last year, Samsung launched a large-scale smartphone factory on the outskirts of India's capital, New Delhi, with an estimated capacity of 120 million units per year, assembling and manufacturing from models in the low-end segment under $ 100 to its high-end segment.
The conversion of production sites from China to Southeast Asia, India and even Africa – first of all rudimentary assembly lines that require a large amount of labor – took place for at least nearly a decade. by. This process is prolonged due to increased labor and rental costs, high tax rates and the economy, especially the technology market, which are falling into saturation. However, in the near future, the speed of transformation has shown signs of significant acceleration since US President Donald Trump strongly implemented policies to impose taxes on Chinese goods nearly a year ago.
Even to Foxconn, China's largest iPhone and iPad assembly plant, is also finding its way to safety when it claims the company is fully capable outside China to meet all production stages. Apple products for the US market, if necessary.
According to some analysts, this announcement by Foxconn and Samsung's plan to leave China may have a serious impact on China's economic stability and domestic employment as well as its position. in the global supply industry.
"Samsung is the world's leading manufacturing group. If its production is to be cut or leave China completely, at least 100 related factories in Guangdong will be closed. They will not can operate without Samsung Hue Chau factory ", Liu Kaiming, head of the Observation Institute of Contemporary, shared with the press.
On the other hand, in this moment, the supply circle in China – importing components from South Korea, Japan and Taiwan, assembling then exporting to EU and US markets – is increasingly narrowed to scale. Specifically, the share of imports from Korea fell 13.1% in the first five months of 2019, while from Japan fell 6.7% and from Taiwan fell 6.9%.
Bern Optical, a factory in Huizhou that supplies toughened glass for Apple and Samsung products, has had to reduce more than 8,000 workers since November due to reduced orders.
Janus, another component manufacturing plant based in Dongguan, Guangdong, said the company's sales fell 14.25% annually leading to a net loss of 2.86 billion yuan ($ 413 million). . This decline came mostly from Samsung – the company's largest customer – when it stopped ordering parts from the fourth quarter of 2018, causing a loss of 2.408 billion yuan ($ 349 million).
In order to save the current situation, China is urgently addressing the previous outstanding claims of many foreign manufacturers by committing that they are always welcomed and protected here. At the same time, the Beijing government has also passed foreign investment laws this year to legal protection for foreign intellectual property and prevent mandatory technology transfer processes.
China is also undergoing red carpet invitations to well-known investors to join the market such as Elon Musk's car group, with a commitment to support Tesla to build an automobile factory in Shanghai with Generous loans of national banks. The factory is expected to open and produce Model 3 by the end of this year.
Official state data showed that basic foreign direct investment inflows were stabilized in the first five months of the year, with an increase of 3.7% or 55 billion USD. However, this figure is 2% lower than the same period last year.
In the face of global supply chain changes, Wang Jisi, a US-China relations expert, on Thursday wrote in the Global Times newspaper that China needs to be very careful, avoiding the trap. "to separate" from the US and the rest of the world.
"Some Americans will want to see us divided in commerce and technology, but we must always actively cooperate with countries around the world, including the US, in the commercial areas and technology", Wang wrote.
Earlier this month, the Chinese Ministry of Technology issued a license for the 5G telecommunications network, including operators of China Telecom, China Mobile, China Unicom and China Broadcasting Network Corporation, opening up huge investment opportunities in the mobile market. in the country in the context of increasing technology war with the US.
"This is only theoretically feasible … However, if you want to realize, the development of China's next-generation smartphones and telecommunications must be connected and compatible with the world. ", Jam Yan, research director at Hong Kong-based Counterpoint Technology, said.
Anyway, the residents living in Zhejiang need to accept the harsh truth that the Samsung ship has been starting to sail.
"Maybe I will work here until Samsung completely leaves China", engineer Huang confided.
clarity (According to SCMP)