"A wise man changes according to The Times; a wise man changes according to The Times!"
Since Samsung announced the closure of its only computer factory in China at the end of July, multinational companies' industrial investment and restructuring in China have once again become a phenomenon.
Some people put forward the theory of "Samsung's withdrawal from China". Looking back at the fact that Samsung has been closing down some manufacturing plants in China in the past two or three years, it is indeed easy for the outside world to have the association of Samsung's withdrawal from the Chinese market.
But as for whether Samsung is really retreating from China, this is actually a good judge, just look at the scale and direction of its investment in China in recent years is enough to show.
The truth of the | capital flows
Throughout the 20-year development history of Samsung in China, it is not difficult to see that Samsung still steps on the important nodes of the changes in the Chinese market and constantly adjusts its layout priorities to meet the development needs of the Chinese market.
In 1992, as one of the first Korean companies to enter China after the establishment of diplomatic relations between China and South Korea, Samsung set up production bases in Dongguan, Huizhou, Tianjin and other eastern coastal areas, and entered the Chinese market from simple assembly and processing, and once became a prominent enterprise in the Chinese market. This phase coincided with the beginning of China's efforts to become the workshop of the world.
Around 2000, in order to better tap the potential of the Chinese market, Samsung established more than 160 branches in China, and gradually promoted the localization of R&D, realizing the integrated operation system of Samsung in China from design, R&D, procurement, production to sales.
At the same time, following the adjustment of China's regional development strategy, the investment area will be expanded from the Pearl River Delta, Yangtze River Delta, Bohai Rim industrial cluster zone to China's central and western inland areas. At this stage, Samsung's development actually coincided with the dynamic changes of China's economy.
Around 2015, Samsung has been more and more closely tied to the Chinese market, but with the gushing development of Chinese technology enterprises, Samsung began to experience unprecedented development challenges in the Chinese market.
At the same time, during this period, Samsung also clearly saw that China's demographic dividend was gradually entering a period of decline, industrial upgrading and high-quality development became a new trend, and only by adapting to the trend can we win greater development space.
Subsequently, Samsung showed a keen sense of the trend, increased industrial transformation and upgrading efforts, and planned a series of actions to eliminate old production capacity and layout emerging industries.
So, in recent years, while we have seen Samsung close some assembly lines and withdraw from some industries that are already in the red Sea of market competition, it has also made aggressive investments in emerging industries.
As can be seen from the public market information, in 2018, Samsung invested $7 billion to start the phase II semiconductor project in Xi 'an, the hinterland of western China, in order to cope with the surging demand for high-end flash memory chips in the global IT market. This strategic semiconductor project was actually the cooperation reached between Samsung and Shaanxi Provincial government as early as 2012, and the investment of the phase I project was as high as $10 billion Yuan, which produces the world's most advanced nanoscale flash memory chips, is the core component of smart terminals such as mobile phones.
Late last year, amid rapidly expanding demand in China, Samsung announced another $8 billion investment in the second phase of a semiconductor phase 2 at its Xi 'an plant to boost NAND memory capacity. At this time, led by Samsung's Xi 'an chip factory, Xi 'an has become an electronic information industry base with a complete industrial chain and global competitiveness.
Similar to the Xi 'an chip plant, Samsung is also building an MLCC(multi-layer ceramic capacitors) plant in Tianjin, an automotive power battery production line, and an OLED display production line, with a total investment of $2.4 billion.
In fact, in recent years, Samsung's investment in China has not decreased, but entered a phase of accelerating growth. The total investment in the past five years has exceeded the total of the previous 20 years. However, these investments have been directed to the emerging sectors such as artificial intelligence, 5G, semiconductor and OLED, rather than the assembly production lines of computers, mobile phones, printers and other terminal products that are familiar to ordinary consumers.
According to public data, Samsung has invested more than $40 billion in China, from 13 percent in 2012 to 52 percent in 2017. The latest figures show that the share has risen to 72 percent, or nearly $30 billion.
It is easy to see that Samsung has only eliminated relatively low-end industrial capacity from China, while in cutting-edge industries, Samsung almost shows a "cobra" investment curve in China.
From the basic perspective, Samsung now has more than 20 production enterprises in China, with a total of nearly 80,000 employees. The business covers many fields, such as electronics, finance, heavy industry and service industry. The foundation is not so deep, so it is almost impossible to "withdraw" from the Chinese market.
No matter from the perspective of investment direction or investment data analysis, Samsung has not moved its important industries out of China, but is more deeply embedded in the development of China in the face of the transformation and upgrading of China's manufacturing and consumer market.
| the first elements of the change
In 2019, Samsung announced global investment plans in artificial intelligence, 5G, biotechnology, automotive semiconductor and other emerging sectors, all of which are covered by the new economic wave being led by China.
As one of Samsung's most important markets, China has become more than just a manufacturing base for its products. Under the guidance of the "great domestic demand cycle", how to boost China's domestic consumption demand in emerging economic sectors has become a new question for multinational companies.
Change with the tide. The elimination of relatively backward printers, mobile phones, computers and other factories and the acceleration of the layout of emerging industries in China is actually caused by the change of the first factor of productivity.
In fact, due to the rapid development and maturity of Chinese enterprises such as Huawei and Lenovo, Samsung has indeed shaken its position in China's mobile phone, PC and other consumer electronics fields. However, the real challenge for Samsung is no longer to compete with rising Chinese enterprises in production efficiency and cost control.
Building lower-tech production lines in areas with lower Labour costs is also a move by Chinese companies looking to grow internationally. Chinese companies such as Huawei, Lenovo and Xiaomi have also launched global investment plans to achieve local expansion more quickly.
However, Huawei and other Chinese companies are subject to the "choke" ban on chips and other key components, which makes us have to review the strategy of corporate globalization. In this regard, Samsung's development has set an example for Chinese enterprises to learn from.
In the consumer electronics and other terminal areas, Samsung's market share has shrunk in China, but it is still strong in the global market. This is just visible Samsung.
In fact, take 5G phones. Samsung is the only company in the world that has both 5G mobile phones, 5G network equipment, 5G chip design and independent wafer manufacturing capabilities. According to a 5G patent licensing list released early this year by international patent data company IPlytics, Samsung ranks first with 1,728 patents.
International patent data company IPlytics has released a list of 5G patents granted
In terms of smartphone terminals alone, Samsung also has the entire core supply chain capability of the phone from the screen, image sensor, memory and chip. Huawei, Xiaomi, VIVO and other Chinese companies that top the global market in terms of sales volume are still dependent on Samsung's core component support. This is "invisible" Samsung, which will continue to have a huge influence on the global smartphone and other terminal markets for a long time to come.
In the field of liquid crystal display, despite the impact of the rise of Chinese companies such as BOE, Samsung still has the industry-leading technology patents and industrial chain synergy in the next-generation production lines such as OLED, QLED and Mico-LED. Samsung, which controls core technology and manufacturing, will continue to be the strongest player on the circuit as it moves from LCD to OLED and QD panels.
Samsung spent a record $16.5 billion on research and development in 2019, much of it on high-end core components such as chips and display panels.
During its 28 years of development in the Chinese market, Samsung has also completed its "transformation" and self-upgrading in the process of transforming from obtaining the means of production to taking technology-driven as the first factor of productivity.
Next, in the emerging industry field led by China, Samsung will make use of its technological breakthrough ability, as well as its long-established R&D system in China and increasing investment in scientific research to serve the Chinese market.
| samsung "root"
What is the master of the world, is nothing more than the constant challenge of self, self breakthrough.
In July 2020, Samsung released its 6G white paper, detailing 6G network systems, technology trends and development applications, and predicting that 6G technology will be commercially available in 2028 and fully explodeable in 2030.
It has always been one of Samsung's industrial development strategies to seize the commanding heights of future competition one step ahead, but such a development strategy is based on Samsung's long-term resource investment and technology accumulation.
In the field of semiconductor chips, which is now the most regrettable area for Chinese people, perhaps many people do not know that in 2017, Samsung finished surpassing the once king Intel and achieved the first place in the world.
Top 10 global semiconductor suppliers by revenue in 2017
From following and imitating Japanese companies, to improving and surpassing its rivals to become the world's No. 1, Samsung's development was ultimately shaped by its corporate roots of "Do what you can't." This is the reason why it has long been the world leader in dozens of products, including mobile phones, televisions, memory and display panels.
"Do what you can't" is not only in the key technical links of the industrial chain, but also in the integration and penetration of the whole industrial chain. Among global players, only Samsung can achieve technological innovation covering the whole chain of semiconductor chips, display panels, sensors, full-category intelligent terminals, software and system services.
Up to now, Chinese companies that have suffered setbacks on the international stage clearly need to learn from Samsung's synergy of cost advantage and technological advantage, and Samsung is the closest "teacher" to Chinese companies.
Moreover, unlike Japanese companies that are overly obsessed with high technology, Samsung, which insists on technology being close to the market, pays more attention to whether technological innovation can eventually fall on the application level and bring better experience to users. This is also an important reason why it is able to surpass and beat Japanese companies in areas such as display technology.
However, from the post-industrial era to the information and digital era, from 5G to 6G, and from the Internet to the Internet of Things era, Samsung still shows its roots, switching to the next generation one step ahead of others, forward-looking layout, and maintaining the lead.
Both in the Chinese market and in the global market, Samsung has long been a leader in the trend of technological change. For China, which will still adhere to the opening-up and global industrial division of labor, the existence of multinational companies like Samsung is still of long-term strategic value and industrial significance.
| epilogue
Multinational corporations are still an indispensable force in China's economic development. The great cycle of internal market demand and the mutual promotion of internal and external double cycle are the new pattern of China's economic development in the future, and also the important gathering market of various global companies and international capital.
In 2019, Samsung's sales in China reached $68.3 billion, making up three of its global markets together with the United States and Europe. Its exports of products produced in China also reached $25.9 billion. In the same year, Samsung's purchase amount in China reached $25.8 billion, with more than 4,000 affiliated suppliers. Samsung has long been deeply involved in the Chinese market.
Along with the adjustment of its industrial layout in recent years and the landing of investment in emerging fields, China, the market that Samsung relies on most, will also give it a new outlook on development.
