Samsung Electronics' sales in China significantly decreased by over 12 trillion won in the first half of 2023
According to BusinessKorea, Samsung Electronics' sales in China in the first half of 2023 decreased by over 12 trillion won compared to the same period last year. The signs of Samsung's withdrawal from China are obvious, as its operating facilities and employee numbers in China are decreasing.
According to Samsung Electronics' semi annual report released on August 17th, the company's total sales in China in the first half of this year amounted to 17.808 trillion Korean won. Compared to the sales of 30.462 trillion won in the first half of last year, there was a significant decrease of 12.654 trillion won (a decrease of 41.5%). The last time Samsung's sales in China fell to the 17 trillion won range in the first half of the year was four years ago in 2019, when it was 17.814 trillion won. Samsung's total sales from China have decreased by 4.7 percentage points, from 26.4% a year ago to 21.7% currently.
Samsung Electronics' total sales in the first half of this year were 81.8978 trillion won (including domestic sales and exports), of which 17.8080 trillion won (21.7%) came from China. At the end of 2021, the proportion of sales from China was 29.9%, which continued to decline. In the first half of last year, it reached 26.4%, and at the end of the year, it reached 25.8%.
It is worth noting that due to the impact of trade disputes between China and the United States, the proportion in the first half of this year was even lower than the significant decrease of 24.9% in 2019. In 2018, the sales proportion from China was 32.1%.
During the period of declining market share in China, the Americas has surpassed China. Although China and the United States have always been the two major sales sources for Samsung Electronics, in 2021, China's share of 29.9% was slightly higher than the 29.2% in the Americas. However, by the end of last year, the share of the Americas (31.1%) had surpassed that of China (25.8%).
The performance of Samsung Electronics' semiconductor production and sales subsidiary in China has also halved. Shanghai Samsung Semiconductor (SSS), which specializes in semiconductors and displays, had sales of 6.59 trillion won in the first half of this year, a decrease of 49.5% from 13.55 trillion won in the first half of last year. During the same period, net profit also decreased by 16.6%, from 1.38 trillion won to 1.15 trillion won.
Analysts believe that the mild impact of China's economic reopening is leading to a slow recovery in local sales. The uncertainty brought about by the Sino US struggle still exists.
Samsung's business and employee numbers in China are both decreasing. According to Samsung's Sustainable Development Report, the total number of non executive employees in China has steadily decreased from 599 in 2020 to 527 in 2021, and then to 477 last year.
On the contrary, Samsung's number of employees in Southeast Asia, Southwest Asia, and Japan is increasing: from 3590 in 2020 to 4305 in 2021, and then to 4583 last year.
Samsung has also reduced the number of operating companies in China. According to the CXO Research Institute in South Korea, Samsung has reduced its affiliated companies in China from 87 in 2018 to 65 this year, a decrease of 22 within five years.
An industry insider commented, "Apart from the conflict between China and the United States, factors such as rising labor costs and political risks in China are weakening China's attractiveness as a 'factory of the world'." They added, "For companies, it will be difficult to completely withdraw from China, so it requires careful consideration
Given the current environment, Samsung Electronics established a China Business Innovation Team at the end of 2021. However, its effectiveness seems limited. The purpose of the team's organization is to oversee the products, brands, distribution networks, personnel, and investments in the Chinese market, but no solutions have been found to address the challenges faced by the Chinese business, especially the semiconductor business, which has been struggling during the market downturn. The smartphone market share remains within the 0-1% range, and with the significant decline in sales in China, the sense of crisis in local operations has intensified.
Samsung Electronics' total sales in the first half of this year were 81.8978 trillion won (including domestic sales and exports), of which 17.8080 trillion won (21.7%) came from China. At the end of 2021, the proportion of sales from China was 29.9%, which continued to decline. In the first half of last year, it reached 26.4%, and at the end of the year, it reached 25.8%.
It is worth noting that due to the impact of trade disputes between China and the United States, the proportion in the first half of this year was even lower than the significant decrease of 24.9% in 2019. In 2018, the sales proportion from China was 32.1%.
During the period of declining market share in China, the Americas has surpassed China. Although China and the United States have always been the two major sales sources for Samsung Electronics, in 2021, China's share of 29.9% was slightly higher than the 29.2% in the Americas. However, by the end of last year, the share of the Americas (31.1%) had surpassed that of China (25.8%).
The performance of Samsung Electronics' semiconductor production and sales subsidiary in China has also halved. Shanghai Samsung Semiconductor (SSS), which specializes in semiconductors and displays, had sales of 6.59 trillion won in the first half of this year, a decrease of 49.5% from 13.55 trillion won in the first half of last year. During the same period, net profit also decreased by 16.6%, from 1.38 trillion won to 1.15 trillion won.
Analysts believe that the mild impact of China's economic reopening is leading to a slow recovery in local sales. The uncertainty brought about by the Sino US struggle still exists.
Samsung's business and employee numbers in China are both decreasing. According to Samsung's Sustainable Development Report, the total number of non executive employees in China has steadily decreased from 599 in 2020 to 527 in 2021, and then to 477 last year.
On the contrary, Samsung's number of employees in Southeast Asia, Southwest Asia, and Japan is increasing: from 3590 in 2020 to 4305 in 2021, and then to 4583 last year.
Samsung has also reduced the number of operating companies in China. According to the CXO Research Institute in South Korea, Samsung has reduced its affiliated companies in China from 87 in 2018 to 65 this year, a decrease of 22 within five years.
An industry insider commented, "Apart from the conflict between China and the United States, factors such as rising labor costs and political risks in China are weakening China's attractiveness as a 'factory of the world'." They added, "For companies, it will be difficult to completely withdraw from China, so it requires careful consideration
Given the current environment, Samsung Electronics established a China Business Innovation Team at the end of 2021. However, its effectiveness seems limited. The purpose of the team's organization is to oversee the products, brands, distribution networks, personnel, and investments in the Chinese market, but no solutions have been found to address the challenges faced by the Chinese business, especially the semiconductor business, which has been struggling during the market downturn. The smartphone market share remains within the 0-1% range, and with the significant decline in sales in China, the sense of crisis in local operations has intensified.