"Samsung's move to close the computer factory is expected. The domestic electronic consumer market is increasingly competitive, coupled with the improvement of the technical performance of domestic equipment, Samsung no longer has the previous competitiveness."
Samsung's layout in China has changed again.
Recently, South Korea's Samsung Electronics announced that it will close its computer factory in Suzhou. According to Suzhou Samsung Electronics Computer Co., Ltd.'s "Related Instructions to Employees" (hereinafter referred to as "Instructions"), Samsung's Suzhou computer factory will shut down the production line and only retain R&D personnel. In the future, Samsung will also focus on the field of PC R&D.
It should be noted that the Suzhou computer factory is Samsung's last computer "stronghold" in China. However, in an interview with a reporter from the 21st Century Business Herald, Samsung China said that it was not accurate to say that Samsung would transfer its computer production line from China to Vietnam, and that Samsung had no clear plan. In addition, Samsung has other computer production lines around the world, and the computer factories in China have turned to focus on research and development.
At the same time, Samsung China emphasized to the reporter of 21st Century Business Herald that Samsung's actions in China are not to withdraw from China, but to carry out corresponding transformation and upgrading. In the future, we will continue to increase investment in China and make corresponding layouts around mid-to-high-end production lines. Samsung Electronics also stated in a statement on the closure of the Suzhou computer factory, "China is still an important market for Samsung, and we will continue to provide Chinese consumers with high-quality products and services."
"Samsung's move to close the computer factory is expected. The domestic electronic consumer market is increasingly competitive, coupled with the improvement of the technical performance of domestic equipment, Samsung no longer has the previous competitiveness." In an interview with the 21st Century Business Herald reporter, Pan Helin, executive dean of the Digital Economy Research Institute of Zhongnan University of Economics and Law, analyzed that, "Facing the declining output value year by year and an uncertain future, it is a reasonable choice to shut down at this time."
Shut down the computer "stronghold"
Although it is now facing the fate of shutting down, Samsung's Suzhou computer factory has also been "brilliant".
According to public information, Suzhou Samsung Electronics Computer Co., Ltd. (Samsung Electronics Suzhou Computer, referred to as SESC) was incorporated in Suzhou Industrial Park in September 2002, with a total initial investment of 33.58 million US dollars and a registered capital of 13.43 million US dollars.
In April 2003, SESC was officially put into operation, covering an area of 26,000 square meters, and passed relevant certification in November 2003. In May 2005, SESC moved the Korean notebook computer production line to Suzhou.
It is understood that SESC has about 2,000 employees, has research and development, testing, surface mount technology (SMT) and assembly production lines, and mainly exports products to Europe and the United States. After its establishment, SESC has been selected as one of the top 200 Chinese export companies for many years.
But now, SESC is finally going to retire. According to the explanation, the main reason for the closure of SESC is due to the fierce market competition in recent years and the shrinking market share of the company's products. According to data released by China Customs, the annual output value of SESC reached US$4.323 billion in 2012, but dropped to RMB7.506 billion in 2019, just over US$1 billion.
The statement pointed out that in response to changes in the market and situation, Samsung headquarters adjusted its development strategy and carried out transformation and upgrading of the computer industry. SESC will focus on research and development, expand and strengthen PC research and development, so that Samsung's computer industry can gain new opportunities in the future international competition. Competitive Advantage. Therefore, in addition to R&D personnel, the performance of labor contracts of other personnel in Samsung Suzhou Computer Factory will be affected.
"Samsung's closing of its Suzhou computer factory this time is actually Samsung's move in the face of the rise of local Chinese computer companies such as Lenovo, Huawei, and Xiaomi. Its market share has been steadily declining, and it will eventually be unable to survive." SPACE China Business School, University of Hong Kong Guest lecturer Wu Yijie analyzed to the reporter of 21st Century Business Herald.
As for why such an operation was chosen at the current point in time, there are reasons behind it. "Under the epidemic, the global economic downturn is certain, but the specific development trend is unknown. Faced with the declining output value year by year and an uncertain future, it is a reasonable choice to shut down at this time." Pan Helin said.
Supply chain shift?
The reason why Samsung's move has gained attention again is because of its previous actions.
In fact, since 2014, Samsung has accelerated the withdrawal of some businesses from China. In recent years, Samsung has successively shut down smartphone factories in Tianjin, Huizhou, Shenzhen and other places. This year, there is news that Samsung will "cut meat" in the LCD production line within the year, and the 8.5-generation line in Suzhou may also stop production. Therefore, there is a view that foreign-funded enterprises represented by Samsung are transferring their supply chains out of China.
However, in Pan Helin's view, these moves do not mean that the supply chain can be completely transferred in a short period of time. "Enterprises are all rational people, and whether to transfer or not depends on cost-benefit. At present, the reasons for the transfer of the supply chain are nothing more than the increase in labor costs, stricter regulations on the ecological environment and technical processes, and the cancellation of preferential policies. Costs have risen.” Pan and Lin analyzed, “However, the rise in labor costs is accompanied by an increase in labor productivity, that is to say, the cost per unit of effective labor has not risen so significantly.”
Pan Helin emphasized that China's good infrastructure, complete industrial chain and huge consumer market have become factors that foreign-funded enterprises have to consider when transferring.
Pan Helin said, "In terms of the market, under the current economic environment, there is an obvious shortage of international demand, and the potential of the Chinese market is well known. The closer you are to the market, the easier it is to realize the transition from product to currency."
Therefore, Pan Helin believes that at present, my country is still the best choice for setting up factories, and the transfer of foreign capital supply chains is only a group of enterprises whose competitive advantages are not obvious.
Wu Yijie also believes that after the outbreak of the new crown epidemic, China's tension in the global market has fully emerged. "The new pattern of 'dual cycle' development in the future of China's economy, on the one hand, stimulates domestic demand, and on the other hand, optimizes the business environment to attract global companies to invest and set up factories in China. This is a market that all foreign high-tech companies cannot ignore."
Wu Yijie analyzed that, in fact, Tesla’s move to set up a super factory in Shanghai is one of the behind-the-scenes contributors to its recent turnaround and stock price hit a record high. Recently, Japan's Toyota also intends to invest 1.2 billion US dollars to build an electric vehicle factory in Tianjin.
"It can be seen from this that it is not a major trend for foreign capital to withdraw factories from China." Wu Yijie emphasized. In his opinion, instead, China's industrial chain is advancing from low-end to mid-to-high end, which has led to the transfer of many foreign-invested labor-intensive industries or industries that have lost their competitive advantage to Southeast Asia, including the computer factory that Samsung shut down this time, and its The mobile phone factory that was closed a few years ago.
