Chinese City Turns into Ghost Town After Samsung’s Farewell

By Tanya Aneja

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  • Samsung had a market share of 15 per cent in China around 2013
  • The company said that it employed 6,000 workers and produced 63 million units in 2017
  • Recently, Dixon Technologies entered into a partnership with Samsung to manufacture feature phones in India

According to a report by Hong Kong-based South China Morning Post, Huizhou city on the north of China’s flourishing Pearl River Delta has turned into a ghost town after Samsung closed its last smartphone factory in China. The company said that it employed 6,000 workers and produced 63 million units in 2017.

Samsung has shifted operations to India and Vietnam in October amid the ongoing trade war between China and the US. Samsung’s market share in China has boiled down to one per cent recently. The company had a market share of 15 per cent in China around 2013. It is also to be noted here that Apple has started retailing assembled in India iPhone XR models recently. These models are being assembled at Foxconn’s facility in the country. The government of India had recently slashed base corporate taxes in the country as well.

Liu Kaiming, head of the Institute of Contemporary Observation, which supervises working conditions in hundreds of factories in China, informed the news daily that Samsung is the world’s leading manufacturing enterprise. Its Huizhou factory had built an entire ecosystem of supply chains in Guangdong and nearby provinces in the past 20 years.

100 factories in Guangdong are going to close down

He added that at least 100 factories in Guangdong are going to close down. They can’t make it without the Samsung’s Huizhou factory, let alone those small shops and restaurants in the surrounding area.

Li Hua, a convenience store owner, told that their business has seen at least an 80 per cent drop compared to August. A large number of workers left in September.

Huang Fumin, a sales manager from Huizhou Star Real Estate Broker, informed that there are about 100 local residential buildings, six to seven floors, around 1,000 square meters, in Jinxinda complex; most were leased to Samsung workers.

Partnership with Dixon Technologies

Recently, Dixon Technologies entered into a partnership with Samsung to manufacture feature phones in India. It will be manufacturing these feature phones in its latest facility spread over 2.24 lakh square feet.

Dixon has been associated with Samsung’s home appliances business for the last two years. Samsung has recently terminated the production of its phones in China. The homegrown company manufactures televisions for brands such as Xiaomi, Panasonic, and Sanyo and will produce the Samsung televisions at its plant near Tirupati.

Xiaomi informed that almost all of the phones that Chinese smartphone maker Xiaomi sells in India are made in the country. The company also stressed upon the fact that ‘Make in India’ Xiaomi smartphones are now being exported to other countries too, though at a small scale.

Muralikrishnan B, Chief Operating Officer, Xiaomi India told the news daily that about 99 per cent of the phones sold in India are made in the country. They make three phones per second.

Josh Foulger, Country Manager, Foxconn India stated that besides initiatives under ‘Make in India’, the corporate tax relief and improvement in ease of doing business have helped a lot.

As per a recent report by Huizhou customs data, in October, the first month after the Samsung factory closed on October 3, exports from the city’s enterprises dropped to 14 billion yuan (USD two billion), a year-on-year decline of 27 per cent.

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