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Sunday, November 10, 2019

What is Samsung trying to do in China?

Samsung had shut down its manufacturing plant in China last month and moved its production to Thailand.  Many analysts were convinced that the shutdown was due to the US-China tariffs and Samsung was trying to evade the US-China tariffs by shifting its production to other Asian countries.

However, Samsung outsourced 20% of its mobile phone production (60m units) to China after the shutdown when it could produce the 60m units in its own plant in Korea, Vietnam, India or even Thailand.

It was supposed to be cheaper to manufacture the 60m units in its own China's plant since its plant was producing 63m units in 2017.  Why did Samsung want to benefit the ODM in China?

The truth is Samsung realizes by now that it makes a strategic mistake by being short-sighted with the pullout and it wants to appease the China government with 60m units order.  This outsourced order was supposed to be much larger but Samsung shrunk it after intense discussion with the Korean government.

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