Samsung and LG are the most popular South Korean smartphone companies in the world. In recent times, the global smartphone market has been so tough and there is no room for mistakes by OEMs. LG’s smartphone business has been declining for several quarters and Samsung is struggling to keep its business at the top level. According to Korean media reports, considering the fierce competition in the global smartphone market, Korean smartphone manufacturers have no choice but to cut costs. One way of doing so is moving out of its home country.
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Samsung has reduced its smartphone production capacity in South Korea more and it is increasing its investment in Southeast Asia. For example, Samsung’s factories in Vietnam, Brazil, India, and Indonesia produce about 300 million smartphones a year. Samsung’s implementation of these moves is clearly due to South Korea’s relatively high labor costs and rising component prices. According to the National Salary Commission of Vietnam, the monthly minimum wage in Vietnam as of 2019 is between $126 and $180.
With the voracious impact of Chinese OEMs on the global smartphone industry, Samsung and LG will encounter more resistance and its need to implement all necessary procedures to cut down production costs.
So they are doing what the US does, abandoning its local economy for cheap labor. What happens when all the cheap labor runs out?