(Yicai Global) Aug. 14 -- Samsung has contradicted media reports that the world's top smartphone seller may close a plant in China that turns out its mobile phones because of slowing sales and rising labor costs.
A representative for Samsung China told Yicai Global that they had not heard anything to the effect that its parent company may close a production base in the northeastern Chinese city of Tianjin, which was first reported by South Korea's Electronic Times yesterday. Samsung also said in a statement that it has not yet made any decision about the factory.
The plant is responsible for a third of Samsung's phone manufacturing in the country, where the Seoul-based company's market share has fallen 19 percentage points in five years. Samsung sells about 500,000 handsets a month, which represented 1.1 percent of the market in June, the head of Navi Consulting told Yicai Global.
The rapid development of Chinese smartphone brands is affecting Samsung's sales in China and in overseas emerging markets, TrendForce Research Manager Huang Yuxuan told Yicai Global. Samsung's global smartphone sales fell 10 percent to 71.5 million handsets in the second quarter, which was the worst performance since the third quarter of 2016, following a setback over a spate of exploding Note 7 batteries.
Chinese rivals such as Beijing-based Xiaomi and Huawei Technologies are grabbing Samsung's market share in Asia, including in China and India. Huawei's global mobile phone sales surged 41 percent to 54.2 million handsets in the second quarter, setting a new record. That handed Shenzhen-based Huawei the title of world's second-biggest smartphone maker, ousting iPhone maker Apple.
Samsung has chosen to aggressively expand in the high-end market to surpass Apple in China, which has left the South Korean company's mid and low-end product lines neglected, while giving rivals the opportunity to develop their businesses in these fields, the head of Navi Consulting added.
Analysts predict it will be difficult for Samsung to change direction. "Chinese brands are actively researching and developing smartphones and expanding their brand value, so the level of their products is far higher than before," TrendForce's Huang said.
Two new flagship phones in the Galaxy S and Note series released this year lacked the creative elements to attract high-end consumers, so Samsung still depends on series J smartphones to support business performance, Huang added.
Editor: Emmi Laine