China is becoming a less attractive place for manufacturers, who are feeling the “hardship” of the country’s undervalued currency, according to the head of Samsung’s digital camera division.
Samsung Digital Imaging, which manufactures in China, had not enjoyed the benefits of Korea’s competitive currency, said Park Sang-Jin, its chief executive.
“The yuan is greatly devalued [so] we had a hardship from the currency,” he told the Financial Times in an interview in New York.
“China still makes sense, but any manufacturers who are keeping manufacturing facilities in China start pointing out the changes in Chinese government policy and the currency devaluation.”
Mr Park’s comments come amid an intense debate on the impact of China’s currency policies, a rising outsourcing trend and intensifying competition between low-cost manufacturing hubs.
AlixPartners, a consultancy, said in May that in the previous six months there had been “significant change” in China’s position in the low-cost country rankings, with Mexico now surpassing it for certain components and China’s “total, fully landed costs” just 6 per cent lower than the cost of manufacturing the same parts inside the US.
“The conditions are getting worse for maintaining our manufacturing facilities” in China, Mr Park said, noting that some Japanese manufacturers were now looking at Vietnam as an alternative location.
“As a global player, we always review our options. We will keep our competitiveness under whatever circumstances,” he said, noting that Samsung had already moved mobile phone production to Vietnam, where it has long produced televisions.
The digital imaging business had held no such talks with Vietnam, a Samsung spokesman said.
Mr Park’s comments came as he unveiled a new range of products that reflect the extent to which the growth of social networking sites is changing the camera business.
One, the TL225, features a second LCD display on the front of the camera, to meet what Mr Park called the “unmet need” of teenagers wanting to take pictures of themselves for their Facebook or MySpace pages.
“They take a lot of self-portraits shots, but they’re not so sure they’re in the frame and well-focused,” he said.
“Lifestyles are changing very quickly,” Mr Park said, highlighting the falling numbers of people who print out their photographs.
Mr Park predicted a “quick recovery” to 2008 revenue levels for the industry next year as consumers resumed travel plans put on hold by the economic slump.
Samsung would increase its global market share in digital imaging from GfK’s current estimate of 11.3 per cent, partly thanks to its largest marketing campaign yet, aimed at building up its brand in the camera business to the same level of recognition it enjoys in flat screen televisions and mobile phones.
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