Six Giants Shut Down Manufacturing Plants

- Dec 10, 2018 -

Although the sun rises day by day, everything in the world is fresh. 2018 is an extraordinary year for global companies. Under the smoke of Sino-US trade wars, companies from all over the world are bound by Trump's policies. Among them, the most well-known is that ZTE's "lifeline" chips are being smashed. Live, live a line. Of course, not only large enterprises like ZTE have experienced such large fluctuations this year, but also many top 500 and multinational companies have directly shut down Chinese factories in 2018, and even more have directly withdrawn from China. So let's take a look at the companies that were shot in 2018?





General Motors


The first big bang is GM. Affected by the continued downturn in the global automotive industry, comprehensive reforms, rapid auto-driving and electric vehicles, and the cost of cutting $6 billion by 2020, GM announced on November 26 that it will close five plants, including North America. The layoffs accounted for 15%, reaching 14.7 million, of which one quarter was non-technical. The move caused a strong dissatisfaction with Wang Trump, saying that the United States saved GM in the past, but now universal ungrateful, but also threatened GM by canceling all federal subsidies. Trump’s meaning is probably why not shut down Mexican and Chinese factories, move them back to the United States, and increase the number of jobs in the United States to ease employment pressure.



Trump, who is a businessman, is not a two-piece thing. Some time ago, he also asked Apple to move the factory back to the United States, using preferential policies to lure Foxconn, which had just been listed, to set up a factory in the United States. However, things may not be as he wished, as the former US Labor Secretary Robert Reich commented in the Guardian that in the global capitalism of shareholder priority, technology does not belong to any country, where is the flow of profits, where does it flow? It may also be Trump's wishful thinking, and the end result is that GM needs to communicate with the parliament.





Samsung Electronics


Samsung is not far behind in closing the factory. In April this year, Samsung's Shenzhen factory was closed and 320 employees were demobilized. This factory is actually used to produce network equipment. According to internal sources, the factory did not receive an order from China during the 4-5 years of transformation. This is a comparison. It’s terrible. Of course, the reality is cruel. There are reasons for this. There are strong network communication companies in China and ZTE. Whether it is for cost control or national sentiment, Samsung has no advantage. Even if the 5G era is coming, Samsung is likely to break into the Chinese communications market.


In the mobile phone business, Samsung seems to be a long way to go. In 2013, China’s market share was as high as 20%, but now it has fallen to less than 1%. In August this year, Samsung said it will stop the operation of the mobile phone factory in Tianjin. With the launch of low-cost, feature-rich mobile phones for domestic mobile phones such as Huawei, vivo, OPPO, and Xiaomi, Samsung’s high-end mobile phones seem to have a sense of acclimatization, and their share has fallen and fallen. In addition, according to a survey by market research firm Strategy Analytics, Samsung sold only 800,000 mobile phones in the second quarter of this year.


Whether it is network equipment or mobile phone business, Samsung has lost in China. After closing the Shenzhen and Tianjin factories, there is only one mobile phone factory in Huizhou, Guangdong. It is reported that Samsung will bring the factory to Vietnam and India to cope with China's rising labor costs. Maybe one day, Samsung can return to the Chinese market and return to the peak.





Omron


As the most representative automation company in Japan, Omron also announced the permanent closure of its LCD panel factory in Suzhou in July this year. Omron’s withdrawal from China is due to the impact of its own LCD panel on OLED panels. Omron Precision Electronics has been engaged in the production and sales of optoelectronic devices such as backlights for LCDs, but in recent years, OLED screens have been used in smartphones and TVs. The widespread use of automobiles, LCD panel reduction is very obvious. The data shows that the market share of LCD panels in small and medium sized panels has dropped by about 10% compared to last year, while OLEDs have grown from 28.5% to 38% this year. As you can imagine, Omron has taken the old road of Nokia and Kodak in the field of display panels, and technological innovation can't keep up, there is no real-time change.



However, Omron's closure of the factory does not mean that it has abandoned the Chinese market. In June this year, Omron added a second phase of the plant in China.





Nitto Denko


Coincidentally, it is also a Japanese company and a Suzhou factory. Nitto Denko, one of the world's top 500 companies, closed its factory in Suzhou in January this year. Nitto Denko, located in Suzhou Industrial Park, is mainly engaged in the production of flexible circuit boards and polarizers. The factory has been in operation for 17 years since 2001, with as many as 5,500 employees in its heyday, and fewer than 500 people were left before the closure. The reason is similar to other companies that shut down the Suzhou plant. As the cost of living in Suzhou is growing rapidly, the cost of supporting an employee increases. In order to reduce costs, these foreign capitals are likely to return to Vietnam to develop factories in Southeast Asia.



Olympus


Olympus, also a giant in the Japanese optical field, announced the closure of its Shenzhen factory in May this year. Since its founding 99 years ago, Olympus has made significant contributions to the field of optics and life sciences. In 1902, the microscope was commercialized in Japan, and its research and development endoscope played a big role in cancer prevention and control. Why did the factory that has been engaged in research and development of traditional cameras and digital cameras in Shenzhen for 24 years shut down? The aging of equipment, financial scandals and limited development of export business have had a great impact on the company's business. After Sony invested 50 billion yen in 2012, Olympus's business focus has also shifted to medical solutions.



AU Optronics


Taiwan-funded enterprise AU Optronics shut down its production plant in Songjiang, Shanghai, China in May this year. The Songjiang plant mainly produces TFT-LCD modules for computers and displays. According to market share, AU Optronics has the world's top five market share in IT panels and TV monitors. It is reported that the Songjiang plant has been in a profitable state. The closure was mainly due to the “unfriendly” external environment. The traditional IT products such as monitors and notebooks were affected by the mobile Internet. Demands continued to decline from 2015, while large and medium-sized module products The Suzhou plant, which has production, is operating well.




Annual general review


Not only this year, but also the world's largest manufacturer of hard disk, disk and read/write heads, Seagate and Japanese camera giant Nikon, which shut down their factories in China and stopped production. In recent years, large companies have been withdrawing more frequently, especially in the Pearl River Delta and the Yangtze River Delta. China, as a country with concentrated labor-intensive industries, is a land of feng shui for many foreign-funded enterprises. In addition to having ample and cheap labor, it also has a broad market, which provides them with unique conditions.


However, in recent years, factors such as national policy encouragement, more open markets, and rising enthusiasm for technology and entrepreneurship have made China's intellectual property rights rise, and Huawei, BOE, and ZTE have emerged as technological companies that can stand alone. Now China is no longer the country that used a million shirts for a Boeing aircraft. In many smart manufacturing fields, the United States and other developed countries have seen that China’s smart manufacturing has begun to panic, using various inappropriate means. China is obviously not worth the candle. In the end, it doesn't matter if it lags behind. The most fear is that there is no innovation reform.


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