Chinese mobile phone manufacturer’s closure in Shenzhen deepens fears of economic slowdown

PUBLISHED : Monday, 28 December, 2015, 7:46pm
UPDATED : Monday, 28 December, 2015, 7:46pm

A Shenzhen-based supplier that assembles mobile phones for major brands like Samsung Electronics has suddenly ceased operations, raising concerns of a worsening slowdown in mainland China’s smartphone market.

G.Credit Electronic Company, a Hong Kong-financed manufacturer that had more than 2,500 workers in the Longgang township of Shenzhen, shut down its factories on Friday, according to a company announcement, in which it said it was stopping operations and terminating workers’ contracts with immediate effect.

It joins the ranks of other electronics goods manufacturers based in the Pearl River Delta that have been shuttered in past months in the wake of a steady decline in demand for consumer electronics merchandise in the domestic and foreign markets.

READ MORE: Sudden factory closures raise fears for Pearl River Delta’s electronics manufacturing sector

In addition to the slump in exports, rising costs involved in running factories in Guangdong have prompted companies from Hong Kong, Taiwan and other overseas markets to withdraw from the province and relocate to other countries.

G.Credit spokespeople could not be reached for comment.

Founded in 2009, G.Credit had once been a supplier to several leading smartphone brands – including Samsung, Huawei Technologies and ZTE – and start-ups like Smartisan.

At the height of domestic and overseas demand for smartphones, G.Credit employed more than 4,000 workers at its Shenzhen plants.

According to Smartisan, its new Smartisan T2 flagship smarphone, produced by G.Credit, will still be launched on December 29 as scheduled. It added, however, that the owner of G.Credit could not be contacted.

Last week, speculation was rife in mainland media about Shenzhen-based smartphone start-up OnePlus laying off staff as sales struggle.

Aggressive mainland Chinese smartphone players Xiaomi, Lenovo, Huawei and ZTE have seen strong competition from smaller domestic brands such as Smartisan, OnePlus, IUNI and Oppo in both mainland and overseas smartphone markets.

The slowdown in the Chinese economy along with the overcapacity in the mobile phone market has hurt local players. Technology research firm IDC, however, forecasts a slight growth in total smartphone sales in mainland China this year to about 424 million units, from 420 million last year.

In October, local media in Shenzhen reported that several factories in the Pearl River Delta, including a mobile phone plant belonging to Jingchi Plastics in the Fenggang township of Dongguan, were shut down after the week-long National Day holiday. That closure came just a day after more than 4,000 workers and suppliers turned out in front of the Longgang district government building in Shenzhen to protest against the abrupt closure of Fu Chang Electronic Technology, a components supplier to telecommunication equipment makers Huawei and ZTE.

On October 5, hundreds of workers at Kinpo Electronics, a Taiwanese-invested factory producing printers, clashed with police in the Changan township of Dongguan.

In September, another plastic hardware supplier in Shenzhen, Hongkaixing, also went out of business.