Samsung Electronics, the world’s largest smartphone maker, admitted its defeat in China when it announced this week it shut down the last phone factory there despite the vast market.

Production at the Huizhou factory ended last month, The Associated Press citing Samsung said in an email Friday, Oct. 4.

The company said it made “the difficult decision to cease operations of Samsung Electronics Huizhou” in order “to enhance efficiency” in its manufacturing.

At its peak, the Huizhou factory was the biggest of Samsung in China, producing a fifth of all smartphones sold in the country, according to the SCMP.

Samsung’s share of the vast Chinese market has collapsed to near insignificance as local competitors like Huawei and Xiaomi got the upper hand. Labor costs have risen as well.

According to Counterpoint Research, Samsung accounted for just 1% of the Chinese smartphone market as of the first quarter of 2019, after holding around 20% of the market on 2013.

The South Korean tech giant is now setting its sights on more promising markets, including Vietnam, which it has moved a large part of smartphone production to.

“The production equipment will be reallocated to other global manufacturing sites depending on our global production strategy based on market needs,” Samsung wrote in the email.

Samsung is now the world’s biggest maker of semiconductors and smartphones and a major producer of display screens.

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