After paying N+5 in compensation, Samsung will completely withdraw from manufacturing in China!

According to media reports on December 17, Samsung Mobile is completely withdrawing from "Made in China" and may subsequently liquidate Samsung Electro-Mechanics in Kunshan, Suzhou, with factory workers receiving compensation as high as N+5.

It is reported that Samsung's market share in China was about 20% in 2013, while in 2019, Samsung's mobile phone shipments in the Chinese market in a single quarter were only 700,000 units, with a market share of less than 1%.

In the global market, Samsung ranked first in the world with 75.5 million mobile phone shipments in the third quarter of 2019, with a market share of 22.7%. Huawei followed closely with a market share of 17.6% and shipments of 58.7 million units, but there is still a gap of more than 10 million units between it and Samsung.

Moreover, Samsung not only has the mobile phone business, Samsung Electronics once occupied a large share of the Chinese market. However, recent news has revealed that after the factories in Tianjin, Shenzhen and Huizhou, Samsung Mobile will once again liquidate the motor factories in Kunshan, Suzhou, and completely withdraw from "Made in China". The compensation for factory employees will be as high as N+5. So far, Samsung's market share in China is only 0.8%.

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Samsung Electro-Mechanics Co., Ltd., located in Kunshan, was registered and established in 2009. It officially started mass production of HDI (smartphone motherboards) in June 2010 and was once the main production base of Samsung HDI products.

However, as Chinese companies joined the HDI smartphone motherboard market, low-price competition caused operational difficulties for Samsung Electro-Mechanics' Kunshan factory, which had been losing money for five consecutive years. Rumors of the factory's closure and liquidation had already circulated on the Internet.

Why Samsung chose to leave China

So why did Samsung choose to leave China? It's actually very simple:

Samsung's mobile phone market has suffered setbacks in China, with only 1% of the market left. There is no point in staying there any longer.

China's demographic dividend is disappearing and Samsung is unwilling to bear the sharply rising human resource costs.

Samsung is not the only mobile phone manufacturer that plans to move its factories out of China. Japan's Sony also announced recently that it will close all its factories in China within this year and then move them to Thailand.

As far as the Chinese mobile phone market is concerned, it can be said that there is a flourishing of all flowers at present, but it can basically still be considered a "one superpower and many strong" situation.

Among China's local mobile phone brands, Huawei is the undisputed number one and is in the absolute first tier. The next second tier is Xiaomi, OPPO, VIVO, followed by OnePlus, Lenovo, Nova and other brands.

Moreover, the market occupied by Samsung mobile phones is mainly in the mid-to-high-end market. As of now, Huawei's share of the high-end market in China has reached 80%, and it is very easy for it to take over Samsung's share of the high-end market in China.

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On the other hand, Samsung's move to India is obviously intended to "make a big splash" in the Indian market, which will inevitably conflict with Xiaomi (Xiaomi has been ranked first in sales in the Indian market for nine consecutive quarters). Therefore, some analysts believe that once Samsung withdraws from China, Huawei may become the biggest winner.

If we review the decline of Samsung mobile phones in the Chinese market, there are mainly two time points:

One is that after 2014, mid- and low-end models were impacted by domestic mobile phone brands, which led to a sharp decline in market share.

Another time was the Galaxy Note 7 battery explosion incident, which dealt a heavy blow to Samsung China.

Through these two turning points, Huawei seized the opportunities and grabbed the vast majority of their market share, becoming the current leader in China's smartphone market and is making every effort to challenge Samsung's position as the world's number one smartphone.

Compensation N+5 sparks heated debate

When large companies shut down, the issue of employee compensation has attracted much attention from the public. According to some netizens, the employee compensation plan for the shutdown of Kunshan Samsung Electronics is N+5, which has triggered widespread discussion among netizens.

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What is N+5? If you work at Samsung for 3 years, you will get an extra 3+5, which is 8 months' salary compensation.

Let's take a look at netizens' comments:

Looking back at the recent violent layoffs, N+5 is Samsung's conscience and a model for domestic companies to learn from! What do you think about this?