Samsung will shut down a factory in Suzhou, China that is its only production facility for laptops and PCs.
Samsung’s Chinese subsidiary told employees on July 29 that it will halt the assembly lines in late August and lay them off. The reason is a dwindling market share in China and intensifying competition. Samsung is considering relocating the factory to Vietnam and will leave only research and development staff in Suzhou.
The Suzhou factory opened in September 2002 and Samsung moved its entire PC production facilities there from Korea in 2005. By 2012 it employed 6,500 workers, but output has declined steadily and staff numbers dropped to 1,701 last year.
In 2013, its shipments were worth W4.51 trillion, putting the Chinese subsidiary in 22nd place in terms of computer parts exports there (US$1=W1,191). But exports dropped to W1.3 trillion by 2018 and the ranking fell to 155th.
Samsung has already shut down four production lines in China over the last two years, closing smartphone plants in Shenzhen and Tianjin in 2018 and its remaining smartphone plant in Huizhou in October 2019.
According to Chinese media, Samsung’s main reason for shutting down the plants is poor sales there. Its computers and smartphones have a weak presence in the Chinese market, where local rivals reign supreme.
The closure is raising concerns over a serious impact on the local economy of Suzhou. After the closure of the Huizhou plant last year, 60 percent of neighboring businesses also closed down, as did around 100 smaller factories in surrounding Guangdong Province.