Sony, one of Japan’s leading electronic companies announced that it plans to close its Beijing smartphone plant and will move production of its smartphones to Thailand. According to a Sony spokesperson, the move is designed to help the company cuts its losses from its unprofitable phone business, which is experiencing an $860 million USD loss for its 2018 financial year that ended on March 31.
Financial analysts from Nomura securities had publicly called for Sony to move its production from China to Indonesia, Thailand or Vietnam, noting that the costs for production in any of these countries would be 50 ~ 60% lower than China.
Sony says that its smartphones will now be produced at its factory in Pathum Thani province, which is north of Bangkok. The company already owns a large production site there that has been suspended following floods in 2011. In simultaneous announcements in Beijing and Tokyo, Sony executives stated that their decision to move production out of China had nothing to do with U.S. – China trade disputes and was simply a decision on how to cut smartphone losses and save the company money.
Although production in Beijing is expected to end by the end of April, some production for components that are manufactured in China by outsourced suppliers will continue and those components will be shipped to Thailand for final assembly in products.
While financial analysts are expected to applaud the move by Sony to move production to China to save costs, a majority of analysts who have previously commented on Sony’s smartphone business have said that the company should sell the smartphone business entirely since it can’t compete with either the high-end manufacturers like Apple and Samsung, nor can the company compete with Chinese low-end manufacturers like Xiaomi.
Sony’s smartphone business has been estimated at a global market share of less than 1% and shipped only 6.5 million handsets this financial year, with primary distribution into Japan and then Europe. The company’s top phone, the Xperia, shipped only 1.8 million units during the current financial year, which is a 55% drop in sales from 2017 when the company sold 4 million Xperia phones.