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Samsung closes Chinese plant, gives farewell gifts

Workers receive new Galaxy smartphones as factory shuts doors
Oct 10,2019
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Samsung Electronics closed its smartphone factory in Huizhou, China, on Sept. 30. [BAIDU]
Samsung Electronics closed down its Huizhou smartphone factory in Guangdong Province, China, on Sept. 30, but it didn’t leave its employees their empty-handed.

According to Chinese news aggregator Toutiao on Monday, Samsung Electronics provided retirement bonuses along with brand new smartphones as gifts to its former employees. Employees who had worked for Samsung for more than 20 years were given a Galaxy S10 and Galaxy Note10, while those who had worked for the company for 10 to 20 years were given a Galaxy S10+ and a smartwatch.

Public opinion on Chinese social media is largely sympathetic toward Samsung.

“As of Oct. 3, Huizhou Samsung Electronics stopped its operations. Thanks to all the manufacturing companies, countless families were able to put food on their table. Goodbye Samsung,” said a retired employee on their WeChat account.

Since 1992, the year diplomatic relations between Korea and China were established, the Huizhou factory has employed up to 6,000 workers and made more than 63 million phones a year.

“As part of an effort to boost productivity in manufacturing facilities, the decision was made to shut down the Huizhou factory,” Samsung announced in an official statement on Oct. 1.

Just six years ago, Samsung held the biggest share of the Chinese mobile phone market, at 15 percent, but that has now shrunk to around 1 percent. According to market research firm Strategy Analytics, Samsung Electronics shipped around 700,000 units to China in the second quarter this year, which accounts for just 0.7 percent of the market.

In the process of closing down the Huizhou factory, Samsung tried to help employees find new jobs. The company has held job fairs since it started offering voluntary retirement in June, inviting local companies such as TLC and BYD.

From now on, Samsung will increase the number of original design manufacturers (ODM) in China, rather than managing production on its own. By entrusting production design, procurement of parts, assembly and production of products to subcontractors, the company expects swift production of products aimed for the Chinese market.

According to data provider IHS Market, Samsung’s ODM smartphone production increased from 3 percent last year to 8 percent this year and is expected to rise to 20 percent next year. The company plans to manufacture and provide its mid-range smartphone Galaxy A series through ODM companies in the future.

BY KIM YOUNG-MIN [kim.byungwook@joongang.co.kr]