South Korean Media: Samsung Electronics Pulls Out of Home Appliances and TV Markets in China

¬ Low profitability in home appliance business leads to outsourcing production

It has been reported that Samsung Electronics will exit the Chinese market for its consumer electronics and television businesses. This move comes 34 years after South Korea and China established diplomatic relations in 1992, when Samsung first entered the Chinese appliance market. Analysts believe that due to increasing competition from domestic Chinese companies, Samsung’s home appliance business has seen deteriorating profitability, prompting a strategic decision to "focus and concentrate" on core areas such as smartphones and semiconductors.

On the 28th, according to sources in the tech industry, Samsung Electronics has finalized its restructuring plan for China operations and will announce it shortly. The core objective is to concentrate efforts on research, production, and investment in high-end sectors like smartphones and semiconductors within China. To this end, Samsung will discontinue sales of home appliances and TVs in China. It will retain its appliance factory in Suzhou, transforming it into an export-oriented production base. Samsung also plans to expand its China-exclusive smartphone line—such as the W-series—and continue developing AI technologies tailored for Chinese consumers.

The reason behind Samsung Electronics’ withdrawal from the Chinese home appliance market lies in low profitability. While Chinese domestic enterprises have cultivated the market through ultra-low pricing, they have recently been rapidly narrowing the technological gap in high-end segments. Samsung's market share in China’s home appliance sector remains negligible. Combined with weak overall demand for home appliances, ongoing tariff threats, rising costs, and increased shipping expenses, profit margins have come under severe pressure.

Moreover, Samsung Electronics will further restructure its appliance business by shutting down certain production lines and shifting to outsourced manufacturing. On the 17th, the company held an internal management briefing for employees under its DA (Appliance) Division, presenting a restructuring plan aimed at improving profitability. The company will reassess the profitability of each product category and prioritize outsourcing production for products with uncertain future prospects. High-value-added appliances such as washing machines, refrigerators, and air conditioners will remain under in-house production, while dishwashers and microwave ovens will transition to OEM (Original Equipment Manufacturer) or ODM (Original Design Manufacturer) models. Additionally, Samsung is considering closing its microwave oven production facility in Malaysia. Kim Je-ki (name phonetically), head of the DA Division, stated: "This year marks the final 'golden window' for structural reform in our appliance business. We will proceed with a strong sense of urgency and transform ourselves into a growth-oriented business grounded in profitability."

Source: Chosun Ilbo

Original article: toutiao.com/article/1863777271262473/

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