Chinese rivals have dealt a major blow to Samsung’s sales and margins across product categories in recent years. In China, the cut-throat competition and wafer-thin margins have pushed Samsung’s smartphone market share to less than 1%, forcing the company to close one of its two local manufacturing plants and cut jobs and production at the other.
Now with Samsung facing similar competition in India, the company is once again compelled to assess its costs and strategies in the region. According to a report in The Economic Times, the Korean tech giant will cut down 1,000 jobs out of the 20,000 in India by October as part of a cost rationalization program that will span across sales, marketing, R&D, manufacturing, finance, and other divisions in the company. It has already laid off 150-odd employees in the telecom networks division and froze recruitment since April.
A Samsung India spokesperson, however, told the publication that the company is committed to creating more jobs in the country and is actively investing in existing businesses and exploring new opportunities such as 5G networks. While the spokesperson didn’t openly confirm the job cuts, the statement “we continue to make our business more efficient and robust for long-term success” alluded to it.
Samsung dropped prices by 25-40%
The industry executives who spoke to the publication placed the blame on plummeting prices of smartphones and televisions, which has put pressure on the company’s profits in the country. The report says Samsung has dropped prices of its smartphones and TVs by 25-40% since the end of 2017 to better compete with Chinese rivals.
Apart from cost cutting, the Korean company is also pursuing an ‘India First’ strategy to improve its position in the market. The online-exclusive Galaxy M series, which made its debut in India earlier this year, was born out of this strategy and has been received well by the customers so far. Asserting the importance of success in the Indian market, Yeon Jeong Kim, Samsung’s Head of Innovation, Product Planning Group, told PTI, “India is one of the big markets for us. It is a fast-changing market. If we can win over India, then we can win over in any global market.”
Update – Samsung has denied the Economic Times report about job cuts in India. The company said it has generated 2,000 new jobs at Samsung in the past one year and has plans to hire more talent across verticals in the coming months.