People walk past a Samsung store in Shanghai, China, Feb. 21, 2020. Reuters-Yonhap
Shen Ling, 48, a resident of eastern Jiangsu province in China, used to be the owner of a number of Samsung smartphones in the 2010s, attracted by their well-designed appearance and popularity among Chinese consumers.
"It was once an age of glory for Samsung in China, when so many of my friends were using the brand for its high-end market standing. I also chose to buy a Samsung phone at that time for the same reason," Shen said.
The story took a drastic turn after 2016, as Samsung's handling of the Note 7 battery explosion incidents led to widespread criticism from Chinese consumers. "The harm to Samsung's image was devastating. It made me unsure if I could trust the quality of its future handsets," she said. With that in mind, Shen finally decided to switch to Huawei in 2020.
Shen Ling's first Samsung phone purchased in 2010 / Courtesy of Shen Ling
Samsung Electronics was once the biggest smartphone vendor in China with about a 20 percent market share in 2013, but its share dropped to just 1 percent in 2018, and has since remained around that level. The company is now facing a dilemma in the Chinese market, as the world's largest smartphone maker has found it difficult to return to its former glory.
Samsung's fall in the Chinese market was partly due to "a combination of inappropriate operations leading to a damaged reputation", said Ivan Lam, a senior analyst for Counterpoint Research, adding that another reason was the strong competition from domestic brands in China — including Huawei, Xiaomi, Oppo and Vivo.
Samsung's fate in China reminds us of Huawei Technologies, which hit numerous roadblocks in Samsung's home market amid local loyalty toward Samsung as well as interest in Apple's devices. But unlike Huawei, which has largely retreated from the Korean market, Samsung is still pinning some hopes on the Chinese market.
"Samsung shifted its focus to the high-end market in China, particularly with the introduction of foldable models," Lam said. "The current strategy for Samsung in China appears to be characterized by conservatism, stability and continuity."
The company continued to launch new models in China over the past few years. It has also been working with some local Big Tech companies, such as Baidu and Tencent, to step up the localization of the smartphone's content ecosystem.
The reason why Samsung didn't make a full departure from China is obvious: It couldn't let go of the revenue stream from the world's largest smartphone market, which had a total of 975 million users in 2022, especially when the company's revenue was taking a hit from sluggish consumer electronics demand.
Last week, Samsung Electronics estimated that its operating earnings for 2023 plunged 84.9 percent from a year earlier to 6.54 trillion won, while annual revenue is expected to drop 14.6 percent to 258.16 trillion won.
The shift in strategy proved to work for some Chinese consumers, like Cynthia Xia, a university student in Shanghai, who started to use the company's foldable handset Galaxy Z Flip4 in 2022. "I was totally attracted by the design and its flexibility to adopt customized settings," Xia said. "I think no other brands are doing as well as Samsung in foldable phones."
A woman walks past an ad for the Samsung Galaxy Z Flip4 smartphone at the company's Seocho building in Seoul, Oct. 7, 2022. AFP-Yonhap
However, what further complicates Samsung's outlook is the ongoing U.S.-China tech war, which has cast a shadow over the Korean company's supply chain in China. Although Samsung, along with SK hynix, has secured indefinite waivers from Washington to ship advanced chip-making equipment to their China plants, it has been downsizing its production facilities and staff numbers in the country.
Over the past years, Samsung has shut down multiple production bases in China, including its last smartphone plant in the southern city of Huizhou and the last PC plant in the eastern city of Suzhou. The total number of its employees in China decreased to 17,891 in 2022, in stark contrast with its peak of 63,316 in 2013, according to Samsung's Sustainability Report.
The relocation of Samsung's factories out of China reflected that the company "strategically deprioritized the Chinese market, resulting in reduced investment in brand and channel building," Lam said.
As the company unveils its latest Galaxy 24 series in the U.S. on Wednesday (local time), with AI features powered by its self-developed generative AI model Samsung Gauss, all eyes are on how the top player can bring change to the global smartphone market.
But in China, the splash is likely to be small. "None of my friends are using Samsung's phones nowadays, so why wouldn't I turn to the domestic brands when they offer similar functionalities with lower prices?" Shen said.
Ann Cao is a tech reporter with the South China Morning Post. She is currently based in Seoul, reporting for both The Korea Times and the South China Morning Post under an exchange program.