Samsung is not a loser in the Chinese market

By Hu Weijia Source:Global Times Published: 2019/10/15 22:54:26

Photo: VCG

Samsung Electronics has maintained its image in China, even though the South Korea-based technology giant has reportedly announced that it is ending phone production in the country. 

According to a Reuters report in October, Samsung shut down its last mobile phone factory in China. On Tuesday, a post that circulated on Sina Weibo said Samsung had offered workers lucrative severance packages including back salary, severance pay, an extra month of social insurance fees, and even an EBOHR watch as a gift. Samsung also contacted other manufacturers to help its workers to find new jobs after the factory closes, according to the post. 

Although the news has not yet been confirmed, Samsung won respect from Chinese netizens with the "decent" shutdown of its last factory in China. Samsung is expected to continue selling its products in the Chinese smartphone market, the world's largest, despite ending phone production. Samsung's severance package will help the company win favor with Chinese consumers.

Despite the phone factory shutdown, the company didn't stop expanding its investment in China. Premier Li Keqiang on Monday visited Samsung's chip plant in Xi'an, Northwest China's Shaanxi Province. So far, the company has invested $10.87 billion in the first phase of the project, and the ongoing second phase will have an estimated investment of $15 billion, according to the Chinese government website. 

Samsung taught a lesson to some Chinese manufacturers, which often show less regard to employees. Many Chinese companies, especially small and medium-sized ones, offer no severance pay when laying off blue-collar workers. There are about 300 million blue-collar and rural migrant workers in China, and they will decide the future of the nation's manufacturing sector.

Some observers think that China doesn't need foreign companies as much as it once did, but they are wrong. The Chinese economy does not lack competitive domestic companies. However, Chinese companies need to learn from their foreign rivals how to foster a healthy corporate culture and meet their corporate social responsibility. This is the most effective way to improve the business environment in China. It's one reason why China is now choosing to speed up the timeline for opening its economy and attracting foreign investment.

Samsung stopped making mobile phones in China amid a fierce battle for market share with Chinese domestic competitors. However, that doesn't mean the technology giant has lost the game to Chinese smartphone makers such as Huawei or Xiaomi. Samsung still enjoys large global market share in smartphone sales, and it will encounter Chinese brands once again in the global markets. 

Huawei and other Chinese manufacturers have worked hard to increase their presence in global markets. They should learn from well-known giants such as Samsung in terms of enterprise management, corporate culture and social responsibility, in a bid to adapt to new environments in Western markets. The "decent" shutdown of Samsung's factory in China is a reflection of Samsung's soft power. If Chinese companies, especially those eyeing outbound investment, fail to learn from Samsung, they're unlikely to improve their global competitiveness.

The author is a reporter with the Global Times.


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