Samsung shuts down Chinese plant as mobile competition takes its toll

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• Samsung will shut down a manufacturing plant in Tianjin, China.
• The plant currently makes Samsung mobile products destined for Chinese consumers.
• The shut down of the plant represents the toll competition from Huawei and Xiaomi is taking on Samsung.

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Today, via Reuters, we learned that Samsung will shut down one of its manufacturing plants in China. The Tianjin plant currently makes Samsung mobile products destined for the Chinese marketplace.

Although Samsung paints the plant closure as part of a streamlining strategy, it's easy to read between the lines: the closure of the plant is a representation of just how much competition from Chinese companies like Huawei and Xiaomi is taking on Samsung.

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"As part of ongoing efforts to enhance efficiency in our production facilities, Samsung Electronics has arrived at the difficult decision to cease operations of Tianjin Samsung Electronics Telecommunication," Samsung said in a statement on the closure.

The factory employs about 2,600 people and will cease operations by the end of this year. The displaced employees will be offered compensation packages as well as opportunities to move to other Samsung facilities.

Samsung has another, larger plant it runs in China in Huizhou. That plant will remain operational for now.

China is currently the world's largest smartphone market, ahead of India and the United States. Although Samsung is still the world's largest smartphone maker, its market share is consistently being chipped at by Chinese competitors. If Samsung wants to continue to stay on top, it needs to figure out a better strategy for both China and India — fast.

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