Samsung admits defeat in China’s vast smartphone market

Just a few years ago, one in every five smartphones sold in China was made by Samsung. How times have changed.The smartphone maker said this week it was shutting down its last phone factory in the country in the southern city of Huizhou. Its share of the vast Chinese market has collapsed and labor costs have risen. The world’s largest smartphone maker is now setting its sights on more promising markets.

At its peak, the plant was Samsung’s biggest in China, producing a fifth of all smartphones sold in the country, according to the South China Morning Post.

As of the first quarter of this year, Samsung (SSNLF) accounted for just 1% of the Chinese smartphone market, according to Counterpoint Research.
The company’s share of the Chinese market had declined steadily since late 2016, when it suffered a sharp drop-off in demand because of the exploding Galaxy Note 7 crisis. Samsung’s delayed response to that situation led to a severe loss of consumer confidence, said Flora Tang, a research analyst at Counterpoint.

Prior to the crisis, Samsung was the one of the country’s top five smartphone vendors, and in 2013 accounted for around 20% of the Chinese market, she added.

The world’s biggest smartphone maker also lost out as local competition grew. Over the last few years, homegrown players such as Huawei, Oppo, Vivo and Xiaomi have become more popular, and they have “grabbed [market share] from Samsung with their strong product portfolio, affordable prices, more localized services ecosystem and extensive sales channels,” said Tang.