Samsung plans to outsource manufacturing jobs to China to compete with rivals

A few years ago, the smartphone industry was seeing the biggest rivalry between two companies. Apple and Samsung were vying for the top spot in the market and it was mostly a neck and neck struggle each year. Then came the deluge of Chinese brands such as Huawei, Xiaomi, OnePlus, Oppo, Vivo, Lenovo, and more. If one looks at the entry-tier to the mid-tier range, industry analysts would say it is the Chinese brands that are clearly ahead of the game. Thus, sources claim the South Korean tech company has plans to rekindle its manufacturing partnership with China in order to stay competitive in the budget category of mobile devices.

This speculative move comes as a big surprise for consumers and investors alike. Last month, Samsung officially ended handset production on Chinese soil. It seems that attractive production costs offered by countries such as India and Vietnam might be in play. A report from Reuters indicates Samsung is secretly handing over manufacturing duties for its Galaxy A series to companies such as Wingtech and others more.

Sources privy to the dealings claim that these outlets are likewise located in China. It was likewise noted that these manufacturers are currently contracted by brands such as Huawei, Oppo, Xiaomi, and other Chinese brands. In the meantime, insiders have provided an estimated number of handsets that will be assembled in these factories.

In 2020, around 60 million smartphones from a total of 300 million devices from Samsung will ship out from these workshops. That's about a fifth of the total number of units heading to retailers globally. From a business perspective, these are establishments that are equipped to handle and meet the production targets of Samsung. However, there are analysts who are concerned about the strategy when it comes to quality control.

An unnamed informant involved in the brand's latest outsourcing deal with Chinese factories confirmed the proposal but evidently expressed some doubts. "This is an inevitable strategy rather than a good strategy," said the source. After two of its most recent safety and reliability fiascos involving the Galaxy Note 7 and the Galaxy Fold respectively, Samsung cannot afford to have a new one destroy its image. Labour in China is still currently the practical choice for companies in order to reduce production costs.