Samsung Electronics adjusted its China strategy and established a Business Innovation Team in China

Recently, it was reported that Samsung Electronics has set up a business innovation team in China. The team is run by Jong-heeHan, Samsung's vice chairman and head of the DX division, meaning innovation across the China business will be directly at his helm.

The reporter learned that Samsung's China business innovation team consists of a company-wide part and business department that supports human resources and marketing. The business unit will be divided into the MX division responsible for the smartphone business and the consumer home appliance and video display (VD) division.

On December 7, Samsung Electronics announced the biggest high-level personnel change in five years through its official website. In this personnel adjustment, 59-year-old Han Zhongxi was promoted to vice chairman and CEO of the newly merged SET division of the two divisions, and he was previously the head of the electronic imaging display business in the consumer electronics business. At the time, Samsung Electronics said that Han Zhongxi was a leader in TV research and development, and was instrumental in the continuous growth of Samsung TV sales around the world. He will strengthen the synergies between the different businesses of the SET division and promote new technologies and business developments.

It is understood that the set division is a merger of two business units, consumer electronics and mobile communications, and Samsung named this newly merged SET division as the DX (Device Experience) division, which involves visual display, digital home appliances, health and medical equipment, MX and network business. Under the leadership of the unified DX department, Samsung hopes to strengthen the synergy between different businesses and create differentiated products and services.

According to the data, based on the third quarter of this year, Samsung Electronics' sales in the Chinese market accounted for about 30% of the company's overall sales, accounting for the first place in the world, followed by the United States, which accounted for 29%, while the rest of Asia and Africa accounted for 16.4%, and Europe accounted for 2.6%. It can be seen that the importance of the Chinese market to Samsung is self-evident.

It is understood that since 2018, the market share of Samsung smartphone shipments in China is only slightly higher than 1%, while Samsung's market share in 2013 and 2014 was as high as 20%. After that, Samsung's share of the Chinese market showed a downward trend, and by 2015, it had fallen out of the top5 in the domestic market. This was followed by a wave of factory closures and layoffs. In 2019, Samsung closed the last and largest mobile phone factory in China, the Huizhou factory in Guangdong. As of 2020, Samsung's China business has about 18,000 employees and executives, down 40% from 2018.

Today, although Samsung's position in the Chinese market is slightly awkward, its performance and profitability in the global market should not be underestimated. IDC data shows that in the past two years, except for Q4 2019 and Q4 2020, which were briefly surpassed by Apple, Samsung is still the world's largest manufacturer in the mobile phone market share. In the domestic market, in recent years, the competitiveness of China's local brands has been increasing, according to Counterpoint Research data, Chinese brands vivo, OPPO, honor and millet accounted for a total of 72% of China's smartphone shipments. If you want to return to Samsung in the Chinese market, the road ahead is not easy.

In the industry's view, the newly established China business innovation team of Samsung Electronics is directly led by Han Zhongxi, marking a change in the Chinese market strategy.