Samsung Electronics is actively expanding production outsourcing and diversifying its manufacturing bases as uncertainties are growing due to various variables such as the COVID-19 pandemic.
Samsung Electronics will shut down its TV plant in Tianjin, China at the end of November. The Tianjin TV factory is the company’s only TV production base in China. At the plant, it has mainly produced TVs for the Chinese market.
Industry watchers attribute the plant shutdown to a decline in its cost competitiveness and rising labor costs in China. Samsung Electronics' share in the Chinese TV market stood at 4.8 percent in the first half of 2020, falling behind Chinese companies such as HiSense (17.2 percent), Skyworth (14.9 percent), Xiaomi (14.5 percent) and TCL (14.4 percent), according to market research company Omdia.
Samsung Electronics has not only stopped producing TVs but other products in China. Previously, it stopped operating its Tianjin smartphone plant at the end of 2018 and its Huizhou smartphone plant in Guangdong Province in 2019. In July this year, the company also decided to stop its last PC plant in Suzhou.
Samsung Electronics is reducing production in China and is increasing ODM and OEM production. Currently, Samsung's ODM products are manufactured by China's Wingtech. OEM and ODM supplies are on a steady rise in the home appliance business. Samsung Electronics is currently producing low-priced kimchi refrigerators and clothing care machines through the OEM method.
On top of that, Samsung Electronics is focusing on production in emerging markets such as Vietnam and Latin America. Its manufacturing bases have been more diversified compared to the past. A typical example is the foldable smartphone Galaxy Z-Fold 2, which is produced not only in Gumi, Korea but in Vietnam and Brazil. In Vietnam and South America, Samsung Electronics mainly roll out budget smartphones.