Han Jong-hee’s winning numbers don’t work… 0 Samsung phones in China

is struggling in the Chinese smartphone market. Its sales, which reached 25 trillion won in 2013, have shrunk to a tenth in seven years, and its market share, which had exceeded 20%, has dropped to 0%. After repeated struggles in the world’s largest market, they tried to change the game last year by setting up a new “China Business Innovation Team” under the direct control of Samsung Electronics Vice President Han Jong-hee, but they were not taken over significant changes for the first year. Samsung Electronics’ China Sales Corporation (SCIC) has turned into a loss after 7 years with no breakthrough.

Samsung’s Chinese sales subsidiary cuts 1/10 of its sales in 7 years

According to the Financial Supervision Service’s 16 electronic disclosure, SCIC had a cumulative revenue of 2.66 trillion won and a cumulative net loss of 31 million won in the third quarter of this year. In the third quarter alone, it posted a net loss of 63.6 billion won. If the loss is not recouped in the remaining fourth quarter, it will turn into a deficit for the first time in seven years since 2015.

SCIC is responsible for selling stationary products such as smartphones and TVs in China. Samsung Electronics ranked first in the Chinese smartphone market with more than 20% market share in 2013, but its sales and market share have since plummeted. Sales, which exceeded 25 trillion won at the time, plummeted to 16 trillion won the following year (2014) and 8 trillion won in 2016. Finally, in 2020, it dropped to 2 trillion won and sales dropped to 1/10 in 7 years.

This is the result of being rejected by native Chinese companies that put price competitiveness at the fore, such as Xiaomi, Huawei, Oppo and Vivo. The year 2016, when there was a boycott among Chinese consumers due to the THAAD (High Altitude Area Defense) sanctions and the Galaxy Note 7 power-on incident, was a particularly painful time.

Its market share, which dropped to 0.8% in 2018, is still around 0%. Samsung Electronics’ slow pace is all the more apparent given Apple’s recent rise to No. 1 in the Chinese market with 25% market share, overtaking Chinese companies. Analysts say the gap in sales in the Chinese market has had a big impact on the prospect of Samsung Electronics ceding the top spot in the global smartphone market to Apple in the fourth quarter of this year.

Last year, the China Business Innovation Team was newly established… The wind of change has ‘stopped’

To overcome this crisis, Samsung Electronics established the “China Business Innovation Team” at the end of last year. In addition to the smartphone business, which has been struggling for several years, it had to increase its TV market share, which was only about 4%. In terms of supply chain management, market innovation was desperately needed.

Vice President Han came to prominence as the head of the innovation team. Expectations for innovation across the Chinese business were high as he headed the DX (Device Experience) division, which oversees the appliance, TV, mobile and networking businesses. However, even a year after the formation of the team, there have been no significant changes.

Running a large-scale advertisement or running an experience center related to the Beijing Winter Olympics earlier in the year was no different than any other Olympic marketing. After the release of Galaxy Z Fold 4 and Z Flip 4 in August, a separate (public) event was held in China and the advertising was conducted in collaboration with influencers. The “W-series”, which has been applied in gold to premium smartphones aimed at the Chinese market, is also a unique marketing that has continued since 2016.

After the launch of the Galaxy Z series, it opened 40 pop-up stores in 30 Chinese cities, including Shanghai, Hangzhou, Shenyang and Harbin, in succession to increase the reach of Chinese consumers. However, Apple and Chinese firms, which are rivals, are also stepping up customer experience marketing, so it’s hard to see that the rise of pop-up stores is differentiated marketing unique to Samsung Electronics.

Apple dominates the premium segment, while Chinese companies dominate the mid-range segment

The industry expects Samsung Electronics to continue to struggle in China. This is because the premium market is dominated by Apple and the low-mid-range market is dominated by Chinese companies. This means that Samsung Electronics has no room to intervene. China’s business innovation team is also in a tough environment to get results.

A business official said, “Samsung Electronics’ position in the Chinese market is ambiguous.” He added: “It is necessary to renew the brand image, but it is a more difficult part of technological development. Recovering market share will not be easy”.

At the end of this year, Samsung Electronics promoted Yang Gul, vice president of China Strategic Cooperation Office, to chairman during the regular personnel appointments at the end of this year. Yang Gul, the new president, led the semiconductor business of Samsung Electronics in China. The Shanghai branch (SSS), which deals with the sale of semiconductors and displays, is also showing a recent decline in performance and the industry says that Samsung Electronics has made this personal decision to strengthen its semiconductor business.

Vice President Wang Tong, head of smartphone sales at SCIC, is the second foreigner to become vice president of Samsung Electronics. Since he was promoted to vice president in late 2013, he has held his position.

Regarding this reshuffle, a Samsung Electronics official said, “Putting the necessary personnel in the right place at the right time is the key to personnel management. Among the personnel working in the region, only Vice President Yang Gul has been promoted.” . It doesn’t mean you’re left out,” he said.

Kim Eun-ji, Hankyung.com reporter [email protected]