Samsung Electronics Co. is readying to move part of its TV production out of China amid deteriorating sales conditions and rising labor cost.
According to sources from the business circle on Monday, the South Korean tech giant reportedly is reviewing a plan to reduce TV production at Tianjin Samsung Electronics in northern China. There also is a rumor that the company already has started cutting the production from the factory on fall in TV sales in China.
Tianjin Samsung Electronics opened in 1996, manufactures LCD TV, monitors and display modules. It is Samsung’s only TV factory in China with more than 90 percent produced for the local Chinese market and the rest for exports.
The company’s share in the Chinese TV market has declined since the Beijing government ended the subsidy program for energy-efficient home appliance purchases in 2013 and instead chose to pick companies to give supports.
Moreover, the labor cost in China has been rising, pushing up the company’s production cost. According to a report by the Bank of Korea, the minimum wage in four Chinese cities – Beijing, Shanghai, Tianjin, and Shenzhen averaged 20.6 yuan ($2.98) per hour as of 2016-end, moving sharply up from 9.7 yuan in 2010. Meanwhile, Vietnam has emerged an attractive alternative with the minimum wage in Hanoi set at 17,500 dongs ($0.75) this year.
A Samsung Electronics official said that the company is mulling various measures to boost TV production efficiency but it is yet to make its final decision.
The company has been speeding up efforts to restructure production lines of not only TVs but also other products to make them more cost-effective. Earlier this month, it announced a plan of shutting down a mobile phone manufacturing plant in Tianjin, China by the end of this month. In July, it converted TV production lines in Suwon, Korea to make only those for pilot tests. It is also reported that the company is considering shifting TV production to Vietnam from Chennai, India.― Pulse