Declining Competitiveness: Samsung Closes Computer Factories In China

Samsung's distribution in China has changed again.

Recently, South Korea's Samsung Electronics announced that it would close its computer factory in Suzhou. According to the instructions to employees (hereinafter referred to as "instructions") issued by Suzhou Samsung Electronic Computer Co., Ltd., Samsung Suzhou computer factory will shut down its production line and retain only R & D personnel. In the future, Samsung will also focus on PC R & D.

The last computer base of Samsung is Suzhou. However, in an interview with the 21st century economic reporter, SamSung China said that it was not accurate for the industry to transfer the Chinese computer production line to Vietnam, and Samsung had no clear plan. In addition, Samsung has other computer production lines around the world, while computer factories in China have shifted their focus to R & D.

At the same time, SamSung China stressed to the 21st century economic reporter that Samsung's action in China was not to withdraw from China, but to carry out corresponding transformation and upgrading. In the future, China will continue to increase investment and make corresponding layout around medium and high-end production lines. "China remains an important market for Samsung, and we will continue to provide high-quality products and services to Chinese consumers," Samsung said in a statement closing its Suzhou computer factory

"Samsung's move to shut down its computer factory is expected. With the increasing competition in the domestic electronic consumer market and the improvement of the technical performance of domestic equipment, Samsung no longer has the competitiveness it had before. " In an interview with the 21st century economic reporter, pan Helin, executive director of the Digital Economy Research Institute of Central South University of Finance and law, analyzed that "facing the declining output value year by year and an uncertain future, it is a reasonable choice to close down at this time."

In recent years, Samsung's computer market has been declining in the face of the rise of Chinese local computer enterprises such as Lenovo, Huawei and Xiaomi. Chinese vision

Shut down computer "stronghold"

Although now facing the fate of closure, Samsung's Suzhou computer factory has been "brilliant".

According to public information, Samsung Electronics Suzhou computer (SESC) was incorporated in Suzhou Industrial Park in September 2002 with a total initial investment of US $33.58 million and a registered capital of US $13.43 million.

In April 2003, SESC was officially put into operation, covering an area of 26000 square meters, and passed the 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 2000 employees, has R & D, testing, surface mount technology (SMT) and assembly lines, mainly exporting products to Europe and the United States. After its establishment, SESC has been selected as one of the top 200 Chinese export enterprises for many years.

Now, though, SESC is finally retiring. According to the explanation, the main reason for the closure of SESC is the fierce market competition and the shrinking market share of the company's products in recent years. According to the data released by China Customs, the annual output value of SESC was as high as US $4.323 billion in 2012, but it dropped to RMB 7.506 billion by 2019, just over US $1 billion.

It points out that Samsung will focus on R & D, upgrade its R & D strategy, upgrade its R & D strategy, upgrade its R & D strategy and upgrade its headquarters in the future. Therefore, except for the R & D personnel, the labor contract performance of other personnel in Samsung Suzhou computer factory will be affected.

"Samsung's closure of the Suzhou computer factory this time is actually Samsung's failure to survive in the face of the rise of Chinese local computer enterprises such as Lenovo, Huawei and Xiaomi." Wu Yijie, a guest lecturer at the space China Business School of the University of Hong Kong, analyzed to the 21st century economic reporter.

There are also reasons why the current time point is chosen for such an operation. "At this time, it is a reasonable choice to shut down the global economic output value year by year, but it is a reasonable choice to shut down the global economic output value year by year." Pan and Lin said.

Transfer supply chain?

Samsung's move again attracted attention because of its previous moves.

In fact, since 2014, Samsung has accelerated the withdrawal of some businesses from China. In recent years, Samsung has successively shut down its smart phone factories in Tianjin, Huizhou, Shenzhen and other places. This year, it is reported that Samsung will "cut off" 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 enterprises represented by Samsung are transferring the supply chain out of China.

However, in panhelin's view, these actions do not mean that the supply chain can be completely transferred in a short period of time. "Enterprises are all rational people. Whether they are transferred or not depends on the cost and benefit. At present, the reasons for supply chain transfer are simply the increase of labor cost, the stricter regulation of ecological environment and technology, and the cancellation of preferential policies. All these factors together cause the rise of manufacturing cost However, the rise of labor cost is accompanied by the improvement of labor productivity, that is to say, the increase of unit effective labor cost is not so significant

Pan Helin stressed that China's good infrastructure, perfect industrial chain and huge consumer market have become factors that must be considered in the transfer of foreign-funded enterprises.

Pan Helin said, "in terms of the market, under the current economic environment, international demand is obviously insufficient, and the potential of China's market is well known. The closer we are to the market, the easier it is to realize the transition from products to currencies."

Therefore, panhelin believes that at present, China is still the best choice to set up factories, and the transfer of foreign supply chain is only a group of enterprises with no obvious competitive advantage.

Wu Yijie also believes that after the outbreak of the new epidemic, China's tension in the global market has fully emerged. "The new pattern of" double cycle "development of China's economy in the future, on the one hand, stimulates domestic demand, on the other hand, through optimizing the business environment, attracts global enterprises to invest and set up factories in China, which is a market that all foreign high-tech enterprises cannot ignore."

According to Wu Yijie, in fact, Tesla's move to set up a super factory in Shanghai is one of the behind the scenes feats of turning losses into profits and setting a record high share price. Recently, Toyota plans to invest $1.2 billion to build an electric vehicle factory in Tianjin.

"It can be seen that it is not a general trend for foreign investors to leave China." Wu Yijie stressed. In the view of Samsung, the closure of high-end factories in Southeast Asia has led to the loss of labor-intensive industries in China.