Samsung’s last remaining overseas computer manufacturing facility in the Chinese city of Suzhou will halt production to instead focus more on research and development.
The South Korean giant has decided that its Samsung Electronics Suzhou Computer plant will no longer focus on assembly and manufacturing “due to fierce market competition”.
“Except for employees at the research and development department, all others’ employment contracts will be affected,” continued a notice to staff first seen by the South China Morning Post, which was confirmed as being authentic by a Suzhou government official working for the industrial estate where the plant is located.
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At its peak in 2012, the factory had 6,500 employees, although the latest change is only set to affect around half of the 1,700 employees who were on contract as of the end of 2019.
Samsung later officially confirmed that the plant would halt production and instead focus more on research and development, with the decision partially due to the “ongoing efforts to enhance efficiency across our global production bases”. The company also confirmed that it would provide opportunities to affected employees to transfer to other Samsung facilities.
A spokesman for the industrial estate said the local labour department would help the affected staff to find new jobs, while adding that it understood and supported Samsung’s decision.
The plant was set up by Samsung in Suzhou in 2002, the year after China joined the World Trade Organisation, with overseas shipments in 2012 eventually totalling US$4.3 billion.
But after having been ranked just outside the top 20 on China’s top exporter list in 2012, the plant dropped to 155th when the list was released last year, with shipments in 2018 down to US$1 billion.
The South Korea conglomerate, though, still has other plants in Suzhou, including the Samsung Suzhou LCD plant that manufactures screens, while it recently opened a flash memory chip factory in the Chinese city of Xi’an.
But the reorganisation of its business offers further evidence that China is quickly losing its advantages in assembling and manufacturing as labour costs increase and global supply chains are disrupted by the coronavirus outbreak. In addition, the decoupling between the economies of China and the United States risks curtailing a key export market for Chinese-made electronic goods.
Can China really survive without the rest of the world, or the rest of the world survive without China?
“Samsung will not be the last foreign-funded business in China to pack up and leave as China is just a manufacturing base and the main markets are in the US and Europe … if these markets are closing doors to Chinese goods, it’s inevitable that multinationals will pull out,” one commentator wrote on WeChat, China’s main social media platform.
Another commented on WeChat that China cannot be complacent about its economic power and autonomy.
“Can China really survive without the rest of the world, or the rest of the world survive without China?,” they asked.
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This article Samsung to halt PC production in China in latest blow to manufacturing sector first appeared on South China Morning Post