Samsung to Begin Layoffs in China, Affecting One Third of Employees

(Source: Nikkei)

Korean mobile phone giant Samsung is facing an uphill battle in the Chinese smartphone sector and planning to downsize its Chinese offices to combat the increasingly intense competition from local juggernauts like Huawei, Vivo and OPPO.

According to Chinese media Tencent News, earlier throughout the day, insiders familiar with the matter stated that Samsung is currently working on a layoff plan, and its mobile phone business will be hit the hardest.

“The 11 branches and offices will be merged into 5, with more than a third of the employees affected and facing layoffs,” said the anonymous source.

Hours after rumors of the layoffs surfaced, Samsung released an official statement confirming the rumors and detailing the downsizing as part of its normal business strategy to enhance the company’s competitiveness in the Chinese market and a necessary impetus for the long-term development.

“In response to the uncertainty of the internal and external operating environment and the fiercely competitive market, Samsung Electronics has adjusted the related business arms to promote rapid growth in China’s 5G market,” said Samsung in its statement.

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The Korean smartphone giant’s market share in China has been consistently shrinking for the past 3 years. In 2016, the company had a 4.9% market share in China which declined to 2.1% in the year 2017. In 2018, the company had a market share floating around 1%.

To combat the harsh market conditions, Samsung may be looking to have third-party smartphone retailers handle sales in China in the future.

Samsung also closed down its last mobile phone factory in China in October, shutting down its Chinese smartphone production line completely, according to Reuters.