Samsung’s strategy to outsource a fifth of its smartphone outturn to China next year can aid it in standing against low-cost competitors such as Huawei and Xiaomi, but it is a technique that was fraught with risks. Samsung Electronics that closed its last in-house Chinese smartphone factory in October is calmly moving occurrence of some Galaxy A series of models to contractors such as a Wingtech, that are little common outside of China. Samsung has been shamefaced about the volumes included. Still, sources have stated the South Korean tech giant plans to ship some 60 million phones that are made in China by so-called original design manufacturers. Wingtech and other ODMs make phones for various brands that include; Xiaomi, Oppo, and Huawei by providing them the economies of scale to keep the cost down, and the fascinating contractors can develop and disclose new budget phones in a short time.
The critics of Samsung’s technique think it risks losing the control over the quality and undermining its manufacturing sagacity by outsourcing, and may even help the competitors by providing contractors the extra volume that they require to lower costs further for all. Samsung can ill grant another quality adulation. It threw away its flagship Galaxy Note 7 in 2016 after reports the expensive mobiles were catching fire, and the launch of its folding phones was delayed this year after some defects on the screen were identified. But with margins razor thin for affordable smartphones, people who are familiar with the strategy of Samsung say that it has little choices but to follow the competitors and use Chinese ODMs to scrape costs.
A source with the knowledge of Samsung’s Chinese operations has stated that this strategy is inevitable. Samsung has said to Reuters that it has been making limited lines of smartphones outside its plants to amplify its existing portfolio and ensures diligent management in the market. Now it is clear that smartphones have come front to a battle over costs, and now it is a game of survival.