(JW Insights) Aug 18 -- Samsung Electronics’ sales in China went down by more than KRW12 trillion ($8.96 billion) in the first half of this year, compared to the same period last year. There are visible signs of Samsung moving away from the country, with number of its operational facilities and employees in the country on the decline, BusinessKorea reported on August 18.
The company’s China sales in the first half of this year totaled KRW17.808 trillion ($13.3 billion), according to the semi-annual report of Samsung Electronics released on August 17. The last time Samsung’s first-half sales in China dipped to the KRW17 trillion range was four years ago in 2019, when it was KRW17.814 trillion. The proportion of Samsung’s total sales from China has decreased by 4.7 percentage points, down from 26.4% a year ago to the current 21.7%.
During this period of China’s declining share, the Americas surpassed China. While China and the U.S. have been Samsung Electronics’ two major sources of sales in 2021, China had a slightly larger share of 29.9% compared to the Americas’ 29.2%. However, by the end of last year, the Americas (31.1%) surpassed China (25.8%).
The performance of Samsung Electronics’ semiconductor production and sales subsidiary in China has also been halved. The sales for the Shanghai Samsung Semiconductor (SSS), which deals with semiconductors and displays, for the first half of this year stands at KRW6.59 trillion, a 49.5% decrease from the KRW13.55 trillion in the first half of the previous year. Their net profit during the same period also decreased by 16.6%, from KRW1.38 trillion to KRW1.15 trillion, according to BusinessKorea.
Analysts suggest that factors such as the modest effects of China’s economic reopening are causing a slow recovery in local sales. Uncertainties arising from the U.S.-China power struggle remain.
Both the number of Samsung’s operations and employees in China are on the decline. According to Samsung’s Sustainability Report, the total number of non-executive employees in China has steadily decreased from 599 in 2020 to 527 in 2021 and to 477 last year.
Samsung is also reducing its number of operations in China. According to the Korea CXO Institute, Samsung has reduced its affiliated companies in China from 87 in 2018 to 65 this year, a decrease of 22 in five years.
Samsung Electronics launched a China Business Innovation Team at the end of 2021 under the leadership of vice chairman Lee. However, its effects seem limited, said the BusinessKorea report.
(Yuan XY)
