Earlier this month, there were some rumors that Samsung would cut almost 10 thousand jobs at its headquarters in Korea. Although the company refuted these claims, new reports from Chinese media suggest that the manufacturer may layoff 10% of its workforce in China amidst slow smartphone sales. Things are not really good for Samsung in China. A year ago, the company had the top spot in sales in the Asian country. However, back in February, they lost the position for Chinese startup Xiaomi. Then Apple came in the way with the iPhone and the last shot was the rise of Huawei, which came in second behind Xiaomi, leaving Samsung with the fourth spot.
It is very important to note that China is the largest consumer electronics market in the world. As so, in Q2 2015 alone, 99 million smartphone units were sold in the country and of that number, only 10.8 percent were made by Samsung. The drop in China sales did lead the fall of the company’s global market share, dropping to 21.9% when compared to 26.2 percent in the same quarter a year ago. Another important factor is that Samsung has been struggling to increase sales in the high-end segment, which would give it the most profits. And to make the bad news worse, Apple, Xiaomi and Huawei are cashing in this market. The Chinese market slowdown may affect Samsung even further, as a report from market research firm Gartner revealed that smartphones sales in the country had a 4% fall, the first quarterly drop ever. A curious fact is that they also profit from other manufacturers, selling them AMOLED displays and processors – including the processors for Apple.
This fierce competition led to a year-over-year decline of 8% in the company’s net profit in the second quarter, a trend that has been going on quarter after quarter. As a result, Samsung is now changing its focus on profitability instead of growth and cutting jobs is one of the first measures to tighten up spending. Executives from the Beijing branch of Samsung were not available to comment on the matter and the Seoul headquarters refused to provide any details, stating that they cannot discuss such subjects. If these rumors are in fact confirmed, Samsung will join HTC and Lenovo, as they also have announced job cuts in their smartphone units as a result of weak sales.