A new report blew up in the Chinese media earlier today, suggesting that Samsung has decided to take further drastic actions to try and improve its situation in the Far Eastern country. The company is reportedly restructuring its offices in China and has laid off a third of its staff, according to Pandaily citing Tencent and anonymous sources.
Samsung is going to merge its existing eleven branches and offices into five, claims the report. The company reportedly issued a declaration on the matter, which was later passed along on the Chinese social media network Weibo. It states that ‘Samsung Electronics has adjusted its business to drive rapid growth in China's 5G market in response to uncertainty in the internal and external business environment and a highly competitive market environment.‘
Samsung continues rethinking its position in China
Samsung isn't giving up on the Chinese market entirely, and the official announcement might even make it sound like the company is making this move as a way to expand. That may very well be the case, but clearly, it's not a good sign for Samsung to have to diminish its workforce in China in order to remain competitive.
This is just the tip of the iceberg. It's not the first time we hear of Samsung China taking drastic measures to stop its decline. A few months ago Samsung shut down its last smartphone manufacturing plant in China because it was no longer profitable. The company is seemingly gravitating towards ODM contracts (seemingly at the cost of putting its suppliers in a difficult spot). With less effort put into manufacturing devices in its own factories in China, it makes a certain amount of sense for Samsung to need fewer offices and employees as well. If anything, this bit of recent news further strengthens the idea that Samsung's mobile business in China is probably going to depend a lot on ODM devices in the coming years.
With production moving to other countries and some Galaxy smartphone models becoming ODM devices created in by third parties, it's going to be interesting to see if Samsung will finally be able to climb up the ranks in China and go back to hiring employees rather than diminishing its workforce in the country. 2020 is going to be the year of 5G, and it might become a decisive year for Samsung China.
