Samsung, the journey of the giant started as a grocery trading store. Founded on 1st March 1938 by Lee Byung-Chull. You must have heard the brand when it comes to buying a mobile phone, Tv, Laptops, Washing Machines, Ac’s, etc. Few of you may know it builds semiconductors, microchips, and more. But what if I tell you Samsung is the brand behind the construction of Burj Khalifa, it has also built cargo ships, Military tanks, and more. Shocking right? Yes (at least for a few people). Today Samsung alone contributes 17% of the total GDP of South Korea. Thus this defines why we are calling it a giant company. In this article, I’ll discuss the current global scenario of Samsung and how it ended up with the largest market in China? & of course with numerous facts.
History of Samsung-
Lee expanded and entered the electronic business after the Korean War in 1969. Before that, the company was trading dry fish, groceries, and noodles. After one year of starting the electronic business, Samsung launched the first electronic device as television P-3202 in 1970. Soon, the organization started building refrigerators, micro oven, Color TVs, and VCRs. During the 1980s the company entered the telecommunication market. Their first product was a built-in car mobile phone SC-100. But the product didn’t turn well for the Co. Then again in 1988, they launched the SH-100 mobile phone. Just over several thousand sold, it also turns a big disappointment for the organization.
Then, after long research, Samsung finally launched a well-appreciated phone SH-700. This became the first success for the company in the mobile business. They captured over 57% CDMA market with their great services. For the first time in 2004, Samsung launched its mobile device in India. But before India, Samsung entered the Chinese market in the 1990s. With all these, Samsung C&T built a few skyscrapers like Burj Khalifa in Dubai, Petronas Twin Towers in Malaysia, etc.
Global Impact of Samsung-
For the past several years, Samsung has maintained the top position in terms of maximum market capture. Except for the 4th quarter of 2020, where Apple exceeds Samsung with a maximum market share of 21%, where Samsung was at 16%. There are several factors behind it like manufacturing shut down and the decreasing market share in the most attractive market place China, (I’ll discuss it in a moment with complete details). However, Samsung fought back and manage to gain the top positioned again for the Q1 and Q2 of 2021 with 22% and 18% respectively. The company has always maintained the highest global shipment of all time. In the 3rd quarter of 2020, the company shipped over 80 million units around the globe. For a better understanding check the below data’s of market share and shipments.
When it comes to India and the United States Samsung has always been in the 2nd position for several years in terms of the market share of Mobile phones. In South Africa, the company has always managed to be in the top position. And of course in the home country (South Korea), it has always been the first priority.
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The current scenario in China-
Apart from China’s smartphone market declined 17% YoY in 2020, Samsung has below 1% market share in China. If you look at the data of the last 2 decades, the company was having at least 15% market share in China 8 to 10 years ago. Right now Samsung is not even there in the top 7 mobile brands in China.
Apple was the only company to see positive YoY growth in the market in 2020. Where Huawei and Honor capturing 41% share in 2020 combined took the 1st position in China. Samsung has shut down its factories in 2019.
How did Samsung lose the game in China?
Samsung entered the Chinese market in 1992. During that period every global company was eagerly waiting to enter China.
There are several factors behind the fall, as some experts suggest due to rising wages global manufacturers are shifting their manufacturing units from China. Recently Sony also announced that they will shift their manufacturing plant from Beijing to Thailand. Yet Apple is still keeping its major products manufacturing units in China.
Another prospect we can come up with the data, as the home ground players like Xiaomi, Huwaei started rising, with the time it became a major drawback for Samsung. Chinese people are preferring local brands for low-budget smartphones and Apple for high-end.
In the early stage, Samsung was focusing to produce home appliances in China. Later, they started building mobile phones as they first launched A-288 in China. It was a success for the brand. Samsung well executed its plans, when it comes to marketing, the brand approached celebrities to advertise their products.
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Fall after 2013-
The brand was doing fine till 2013. The market share was above 15% at that time. What exactly happened after that? How a giant company can disappear from the largest market within 6-7 years? Neither the company nor the Chinese govt. gave us the exact reasons. As I said before, there are different opinions by different experts, like the increase of wage rate. But will you believe that this giant company couldn’t afford that rate? How come Apple, Dell, Hp are still doing business there? How these companies are still able to keep their manufacturing units in China? Then it is for sure we can’t blame this completely based on political aspects. Can we say it’s because of their strategy of doing business there? Let me explain.
During the year 2013-14 Samsung was hoping to grow their business exponentially. But with the launch of the Galaxy-S4 company face disappointment. And this fallback of the company became an opportunity for local brands. Xiaomi, Honor, Huawei, etc took this opportunity and provide more powerful and fast mobile devices to the consumers. If you see the graph of Chinese consumers’ choice of purchasing mobile devices, the graph increased rapidly for these local brands, where the demand for Samsung decreased over time. Vivo, Oppo, Xiaomi not only took the market from Samsung, but they also changes the overall outlook of the market. Today these companies are not only doing good business in China also in several parts of the world including India.
Not only that the other companies were/are doing a good job, but Samsung lost the game also because of their reputational damage. The Galaxy Note 7 became a disaster for Samsung. The issues like overheating, blasts came into the news and damaged their reputation. The company faced over 5 billion dollar loss due to this single device. Not only in China, but the company also faced an overall back lass in the global market. They had to take back over 2.5 million sets from around the globe. But the shocking news came when Samsung refused to recall the devices from China. This was one of the major reasons that consumers lost trust in the brand.
2019- A tragic year for the brand-
Although the company was fighting for few years after that, the year 2019 became a devastating year for the brand. In 2019, the brand launched Galaxy fold worth over 2200 US dollars. Executive DJ Koh regretted launching the mobile too early. Soon after the launch, the device became another disaster for the brand. Consumers were seeing major display issues in the device.
After this incident market share for Samsung was decreasing dramatically. Other than that, the news of senior executive arrests due to severe fraud cases was another major reason people were losing faith in them. After all this due to the sudden decline in China, Samsung had to shut down its manufacturing units. And today their market share became below 1% in the Chinese market.
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Current Scenario in India
The giant had to shift their manufacturing hub, they focused on the 2nd largest consumer market ‘India. Samsung shifts its global manufacturing unit from China to Noida, India. According to the data of the 2nd quarter of 2021, currently, Samsung holds the 2nd position in terms of the mobile device market share with 18%, where Vivo captured the third spot with a 15% share. In India also Xiamo leads the market with a 28% share. And the OnePlus led the premium market (>INR 30,000) with a 34% share.
Although Samsung has lost the market share in China, yet they are still holding the highest market share in the world. It may affect in the future due to the absence market of China, but it’ll still have the influence globally. Samsung needs to focus on the mistakes they had/did in China, it shouldn’t be repeated. For the low price devices, the brand has improved a lot. The consumer believes still plenty of rooms are there, that the consumer is waiting to change by the company. It was and is one of the most lovable brands in India and globally as well.
Above mentioned all the data are from counterpointresearch