Samsung’s departure is new blow to Chinese manufacturing

www.ft.com

Samsung is proving China is not the only manufacturing game in town. As of October 1, the world's largest smartphone maker (23% of the global market) no longer has any manufacturing operations in China.

As recently as two years ago, the Huizhou plant’s 6,000 workers were still making 63m phones, or 17 per cent of Samsung’s global production, according to analysts. But its closure, alongside plants in Tianjin and Shenzhen, is the culmination of a decade-long strategy by Samsung to “diversify the risks of its manufacturing bases”, according an executive at the South Korean company.

Most of Samsung's manufacturing now takes place in Vietnam, where Samsung first built a facility in 2008. China's labor cost advantage has eroded over the last 15 years as the country has seen increased prosperity and wage increases - wages in China are double that of Vietnam and several times that of similar workers in India. Given the added political uncertainty and the ongoing trade war between China and the US, expect to see more companies trying to follow Samsung's lead.

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