After closing its last smartphone factory in 2019 in China, Samsung will now also close the last computer factory.
Rising labor costs under the Chinese Communist Party (CCP) had already led South Korean company Samsung to close its last smartphone factory in China last year. Now the economy has been hit by the CCP Virus and the trade war with the United States, an explosive combination that is making people reconsider where to locate production and supply chains of a large number of big firms, as is the case with Samsung, which recently decided to also close its last computer factory in China.
According to the South China Morning Post, Samsung’s computer assembly line in Suzhou, China, will cease production and focus more on research and development.
In a notice to company personnel, which the South China Morning Post had access to, “Except for employees at the research and development department, all others’ employment contracts will be affected.”
The factory’s best year ever for turnover was 2012, with 6,500 employees. Currently, 1,700 employees are looking at their job prospects with fear following the recent announcements by Samsung. Of these, only half would be affected by the manufacturing and assembly tasks.
The plant started work in Suzhou in 2002, shortly after the CCP joined the World Trade Organization. Overseas shipments since it began production increased exponentially until 2012 when it reached its peak turnover of $4.3 billion, making it to the top 20 in the list of China’s largest exporters.
By 2018, turnover had already fallen to a billion dollars and labor costs had increased considerably. A few months later, Samsung closed its mobile phone plant and moved it to Vietnam.
Samsung still maintains a substantial LCD display manufacturing plant in Suzhou and recently opened a memory chip factory in the Chinese city of Xi’an.
The reorganization of the South Korean conglomerate is a reflection of the changes China is undergoing as a manufacturing and producing country. It is losing considerable advantages in assembly and manufacturing as its labor costs rise and the CCP Virus constantly threatens the continuity of global supply chains. This is compounded by the trade war with the United States that opens the possibility of restrictions to a key export market for Chinese-made electronics.