Date
17 December 2017
Samsung may shift 80 percent of its production in China to Vietnam. Photo: Bloomberg
Samsung may shift 80 percent of its production in China to Vietnam. Photo: Bloomberg

Local brands hold key amid exodus of smartphone makers

Samsung Electronics, the world’s largest smartphone maker, may shift 80 percent of its production in China to Vietnam, an industry analyst said.

About 80-90 percent of the world’s computers and mobile devices are still made in China, but some production lines are leaving the country amid rising labor costs, Gao Shiwang, deputy secretary of China Chamber of Commerce for Import and Export of Machinery and Electronic Products, told news website Yicai.com.

Samsung is investing US$2 billion to build its first factory in Vietnam. By 2015, over 40 percent of the firm’s smartphones will be made in the Southeast Asian nation.

If more foreign firms choose to set up production bases elsewhere to save on costs, the exodus may put China’s exports at risk.

In the first quarter, the country’s export of computer tablets and notebooks dropped 7 percent from a year before. Meanwhile, the United States imported 14 percent less tablets and notebook from China in the first three months of the year, compared with a year before, while its imports from Vietnam increased more than threefold during the period.

But despite the trend, overseas sales of indigenous smartphone brands can support the growth of China’s exports.

Domestic brands usually charge less for the same specifications compared with premium brands like Samsung and Apple. Their products are gaining popularity in emerging markets, where consumers are keen on getting value for their money.

Africa is one market where Chinese brand awareness is rising. Consumers there prefer to buy branded smartphones, and one Chinese smartphone maker was able to sell 24 million units in the region in just five months, a source in the company told Yicai.com.

Telecommunications equipment maker Huawei Technologies booked more than US$9 billion in sales at its consumer business last year, with smartphone shipments to Africa, the Middle East and Europe reaching 52 million units. The overseas market as a whole accounted for half of its total sales last year.

– Contact the writer at [email protected]

CG

 

 

EJ Insight writer

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