April 25, 2024

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[THE INVESTOR] Samsung Electronics reshuffled its Chinese arm on Aug. 1 with the aim of turning around its sluggish business in the world’s largest smartphone market, but the Korean tech giant denied speculations of job cuts resulting from the reshuffle.

“We have reshuffled our Chinese unit today in the hope of reversing declining sales. Seven sales points have been closed and replaced by more segmented 22 bases to be more closely supervised by the Beijing headquarters,” a Samsung Electronics’ official told The Korea Herald.  

The seven sales points were in North China, East China, South China, Central China, Xinan, Xibei and Dongbei under the Beijing headquarters.

“There will be no cuts from the reshuffle,” Samsung said, denying rumors that some local workers would be dismissed.

The tech giant’s reshuffle in China came amid continued sluggish sales in its smartphone and home appliance businesses in recent years.

The market share of Samsung’s mainstay, the smartphone business, fell to 5 percent last year from 19.7 percent in 2013. Its shipments dropped to 23 million units from 62 million units during the same period.

Its smartphone business is losing steam in the Chinese market due to the rise of Chinese brands, including Huawei, Vivo, OPPO and Xiaomi. Sales of smartphones made by Chinese firms accounted for 87 percent of total sales in the nation in the second quarter of this year, according to Counterpoint Research.

Last year’s Note 7 incident fueled further discontent among Chinese consumers. Samsung did not include China during the first recall of its fire-prone Note 7 in September, but the batteries used in China were found to have problems later.

“Samsung is expected to keep a low profile over the next year, with Chinese consumers’ low expectations toward its upcoming Note 8, due to persisting discontent from the Note 7 incident alongside the launch of Apple’s iPhone 8,” said Kang Kyung-soo, a researcher at Counterpoint Research.

The Galaxy S8 series, Samsung’s first premium smartphones following the Note 7 incident, sold 300,000 units in China in the first month after its launch in May, pushing the ranking of the Korean tech giant to sixth place with a 3 percent market share in the second quarter of this year. 

Alongside smartphones, Samsung’s home appliance business is also struggling in the country, with the combined share of Samsung and LG in the Chinese market standing at less than 5 percent last year, according to the US market research firm Strategy Analytics. 

By Shin Ji-hye/The Korea Herald (shinjh@heraldcorp.com)