Samsung moving smartphone production to Vietnam to protect profit margins
Samsung makes a lot of money off its smartphones thanks to high sales and some exorbitant profit margins on devices, and now the Korean manufacturer is reportedly making plans to shift some of its production from China to Vietnam, where it can “secure even lower wages and defend profit margins,” according to Bloomberg. Samsung’s $2 billion plant in Vietnam will start producing devices in February next year, and by 2015, it will be responsible for around 40 percent of the company’s smartphones.
Basically, this is Samsung’s attempt to make sure it keeps making as much cash as before, especially since it will be focusing on low-end and mid-range devices, including a tablet that costs around 100 Euros, going forward, in an attempt to ward off competition from Chinese and other manufacturers that make low-margin high-value products to attract consumers. Vietnam’s labor costs are almost one-third of those in China, so while prices of Samsung’s phones and tablets might go down in the coming years, it will be offset by the lower costs of production that will result from a shift to Vietnam.