Huizhou city has turned into a ghost town after Samsung closed its three-decade old factory and shifted operations to India and Vietnam in October, in the first visible fallout of the ongoing trade war between China and the US. The bustling city turned a “ghost town” after Samsung closed its last smartphone factory in China.
Samsung relocated production to Vietnam and India in large part as a response to the trade war between the world’s two largest economies, it said, adding that the industry insiders consider that it reflected China’s changing position in the global supply chain. US President Donald Trump launched the trade war with China last year demanding Beijing to reduce massive trade deficit.
While the two countries held several rounds of talks to end the trade war, the conflict, however, left trail of devastation for the Chinese manufacturing industry which was badly hit by the economic slowdown and steady fall of exports in the last few years. Many of the employees who were forced to leave the Huizhou city factory.
“Samsung is the world’s leading manufacturing enterprise. Its Huizhou factory had built an entire ecosystem of supply chains in Guangdong and nearby provinces in the past 20 years,” said Liu Kaiming, head of the Institute of Contemporary Observation, which supervises working conditions in hundreds of factories in China. “At least 100 factories in Guangdong are going to close down. They can’t make it without the Samsung’s Huizhou factory, let alone those small shops and restaurants in the surrounding area,” he told the Post. The impact of the closure also stretches as far as the town of Changan in Dongguan city, some 100-km west of Huizhou, where thousands of migrant workers and executives of a factory once owned by the Shenzhen-listed Janus Intelligent Group, a leading Chinese robotics company, have had their hours significantly reduced.
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“As soon as the Samsung factory closed, the price immediately dropped from 4.8 million yuan [$680,000] in August to 3.8 million yuan [$540,000], and still none of the investors are interested at this price,” he said. According to Huizhou customs data, in October, the first month after the Samsung factory closed on October 3, exports from the city’s enterprises dropped to 14 billion yuan ($two billion), a year-on-year decline of 27%, the report said.