SEOUL – Samsung Electronics is undertaking a major restructuring of its home appliance business in China, marking a significant pivot 34 years after first entering the market. The move is seen as a strategic shift to escape cutthroat price competition with local Chinese manufacturers and focus instead on high-margin premium products and platform-based service models.
According to industry sources on May 6, Samsung is transitioning its business focus in China from mass-market sales to advanced R&D, production cooperation, and investment in high-tech sectors. This decision follows years of declining market share; recent data from market researcher AVC shows Samsung’s share in the Chinese TV, refrigerator, and washing machine markets has dipped to 3.6%, 0.4%, and 0.4%, respectively.
During the first-quarter earnings call, Park Soon-cheol, CFO of Samsung Electronics, noted, "The appliance business is facing increasing profitability pressures due to intensifying competition and risks such as tariffs. We are pursuing a strategy of 'selection and concentration' across our entire business portfolio."
A New Leadership for a Service-Centric Future
The appointment of President Won-jin Lee as the head of the Visual Display (VD) Business Division underscores this transformation. Lee, a renowned expert in content and services who was instrumental in building the "Samsung TV Plus" ecosystem, is expected to spearhead the diversification of Samsung’s revenue streams.
Under Lee’s leadership, Samsung aims to transform its dominant global TV hardware presence into a robust service platform. This includes expanding free ad-supported streaming services (FAST) and enhancing subscription-based models like the "Art Store." The goal is to establish long-term "cash cows" that generate revenue beyond the initial point of sale.
Maintaining R&D Roots
While Samsung is scaling back its retail sales footprint in mainland China, it plans to maintain its R&D hubs. The company views the Chinese market as a critical testbed for new technologies due to the high sensitivity of Chinese consumers to latest tech trends.
Historically, Samsung established a massive manufacturing presence in China following the normalization of diplomatic ties in 1992, with major plants in Suzhou, Huizhou, and Tianjin. While the era of mass manufacturing for the local market is evolving, Samsung’s strategic shift reflects a broader global trend of prioritizing software and service ecosystems over traditional hardware manufacturing in highly competitive regions.
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