Sony shuts down its mobile phone factory in Beijing: Last years production was like toothpaste squeezing

 Sony shuts down its mobile phone factory in Beijing: Last years production was like toothpaste squeezing

Economic Observer reporter Chen Qiuzheng has more than a dozen security guards stationed at the entrance to maintain safety. Nodas factory cant hear the roar of machine work. Although the employees are still punching in, they cant see the busy figure for work. Every day, they come to two or three meetings and occasionally come out from the entrance to distract themselves. Their faces are still dignified.

This is the scene of a mobile phone factory in Tianzhu Airport Industrial Zone, Shunyi District, Beijing, which has been set up for 20 years. It was once the big taxpayer in Shunyi District, namely Beijing Soaptian Mobile Communications Co., Ltd. (hereinafter referred to as Soaptian).

On March 28, Sony, the old owner, announced that it would end the operation of the factory. Since March 20, Soapday has provided employees with a two-way termination of labor contract plan. At present, thousands of formal employees who have not left the company have joined the company since the beginning of its construction. Suddenly, the economic pressure of unemployment is coming.

Reporter interviews found that behind Sonys closing down and leaving, the trigger factors may not only be the higher human cost mentioned by Sony, but also the poor operation of its mobile phone business and the continuous loss of Chinas industrial upgrading.

Sony Beijing Plant Closed

On March 29th and April 2nd, reporters visited Soaptian factory twice. An employee of a printer near the factory told reporters that in his early years, he could see tens of thousands of people working busily in the factory. In the past two years, he felt that everyone had gone away.

Yu Hui, an employee who has worked in Soapday for nearly 20 years, said that in her most brilliant impression, her department had 3,000 production employees and often worked overtime. On March 20, employees were suddenly informed that the factory was closing. As early as two years ago, when the companys output fell, there were rumors that it was going to close down, but it did not. In the past, the company has offered voluntary departure plans to all employees in the form of e-mail twice.

The staff composition of the factory includes formal employees and temporary workers signed by the third-party dispatching company Qingyun Tongchuang and Tianhong. Employees dispatched by Tianhong were demobilized last year, while Tianhong compensated for the demobilization by n+1 before March 31 this year.

Most of the nearly 1,000 employees who have not yet left the factory grew up together, but they are also facing the problem of how to leave.

It is understood that the company puts forward three kinds of treatment plans for the formal employees, without any written documents, but the employees can see the compensation amount calculated by the company to the employees. The premise of the compensation is that the employees should leave voluntarily.

The first cut-off deadline is before April 10, in the form of n+4 subsidies, and the second is between April 10 and May 1, when subsidies become n+2. If not, after May 2, employees will be laid off according to the economy. Employees will stop working at home and only pay 70% of their basic salary, that is, 1 750 yuan. They are reluctant to leave, because the company has not solved the problem of placement, and the compensation scheme can not meet your expectations, we are facing the problem of old-age re-employment, and there are more than 60 dual employees, we are under great economic pressure. Yu Hui said.

At the entrance of the factory on March 20, at Sony Wangjing headquarters on March 29 and April 2, hundreds of employees had collectively defended their rights many times, and at other times, 11 members of the working Congress and leaders had videoconferencing sessions. They won the scheme of n+4 and 20,000 yuan compensation, and before April 10, they began to negotiate successively for the departure formalities.

Early signs

Yu Hui told reporters that there were early signs of closing the factory in Beijing. In 2015, Sony began to set up a mobile phone factory in Thailand. In 2016, Thai employees came to study in Beijing factories. In 2017, the output of Beijing factories began to decline.

Reporters interviewed a number of employees to learn that before 2017, the factory still had production, but in the past year has changed, production like toothpaste squeezing, only for a few products slightly 10,000 or thousands of production.

Yu Hui recalled to reporters what she learned about the Thai mobile phone factory, saying, Thailand started to organize factories in 2015, one after another from this packaging line to that side, we will also provide various support here, including production line staff, assistant engineers, quality department staff have to go to Thai factories to help. In 2016, nearly 20 Thai employees came to study here, mainly to learn technology, production line operation and personnel management.

The design department staff described to reporters what she knew. Before 2016, all Sonys mobile phone products would be manufactured in Beijing factories. But from 2016 onwards, they will move one of the five already formed and mass-produced lines to Thailand, slowly relocate the trial-produced and smallest model lines, and then send them to Japanese and Japanese operators. The products with high auditing index are made there. At present, the big screen mobile phone factory in Thailand is also doing it.

Sony told reporters that the company originally had two mobile phone manufacturers, one for Soeptin and one for STT in Thailand. The main reason for the shutdown of Beijing factories is that the output is declining year by year and the start-up is insufficient. There is no transfer to Thailand. In the future, Sony will continue to manufacture smartphone devices in Thai factories, and will continue to seek the best production solutions, including the ODM manufacturing currently used, so as to be able to flexibly respond to the rapidly changing smartphone market situation.

But for the details mentioned by the above employees, the reporter sent a letter of inquiry to Sony for confirmation, saying that Sony Eptin belongs to a joint venture of Sony Mobile (China). Sony China can only explain the incident at the group level at present, and can not answer many details concerning the production of the factory.

Sonys smartphone business has been losing money in recent years, compared with other sectorsperformance growth. According to the third quarter of 2018, Sonys total revenue was 24.8 billion yen, and its net profit was 429 billion yen, an increase of 45% year on year. Sales revenue of Sonys mobile communications business fell to 137.2 billion yen from a year earlier, with a business loss of 15.5 billion yen. According to Reuters, Sonys mobile phone now accounts for less than 1% of the worlds total.

2017 is a turning point for Sony Mobile. Yu Huixiang compared the production data of Soaptian in the past two years. The output of Soaptian in 2017 is about 6 million, while in 2018 it is about 1.39 million. The decline is very large. The output of Soaptian in the past year is even smaller. It only aims at several products, giving a little output of 10,000 or thousands of products. The output was returned on March 31, and the ACC production department also has a production line in the production of headset bluetooth. An employee of the production department said that she came to Soaptian at the end of 2012. At that time, she had tens of thousands of employees. The workload of the factory was very heavy. There were hundreds of production lines. By October last year, there was only one production line left. Employees took a vacation for two months. Nobody is working now. They come to two or three meetings every day.

What worries Yu Hui is that the companys financial year deadline is April each year, which will give the budget of operating funds for the next fiscal year, such as reimbursement, bonuses, office expenses and other expenses, but started to delay two years ago.

In the early mobile phone market, Sonys manufacturing capability had an advantage, and as early as Apple and Samsung had not emerged, they had their own position.

Looking back at the key reasons for Sonys mobile phone decline, generally speaking, it is from China to Europe and then to the United States, Sun Yanbiao said. In a sense, first of all, Sony did not grasp the opportunities of smartphone market brought by Chinas 3G era in the Internet era, that is, in 2010-2014, so that the mobile phone market is only in the United States. Since 2014, domestic brands headed by Huawei, millet, OPPO and vivo have entered Europe on a large scale, and Sony, the earliest market share eroded, has been repeatedly compressed. In addition to the failure of the market level, from the product level, we can see that Samsung, Apple, Huawei, OPPO, vivo and other brands of mobile phone products in succession, but Sony has not been a leading trend of products, the advantages of Sonys industrial chain is not reflected in the mobile phone, in the camera, Sonys sensor chip is the best. At present, Sonys sales and market share are too low to support the two factories, Fu Liang, an independent communications analyst, told reporters. Especially in the Chinese market, which has been squeezed by the Chinese mobile phone brand, Soapdays advantage in the near supply market (from logistics, tariffs and other considerations) has disappeared, so it took a shrinking strategy. At the same time, Chinas operating costs are higher than Thailands, Thailands mobile phone market demand is also more robust, targeting Thailands demand will help its sales growth.

Cost pressure

In recent years, similar to Soaps fate, there are Samsung Mobile Phone Factory in Tianjin and Epson Seiko Factory in Shenzhen. These foreign enterprises are closing down one after another. Liu Xu, a vice president of mobile phone brand, told reporters, The whole low value-added industry (such as assembly) is shifting to countries outside China. This trend is very obvious.

Yan Zhanmeng, Director of Counterpoint Research, said that the route of the transfer also changed following the lower-cost regions, moving from Japan and South Korea to Taiwan, from Taiwan to eastern and Western China, and then to Southeast Asia.

Under the background of industry competition pressure and poor operation, the rising trend of human resources and land use costs of enterprises is particularly sensitive to such enterprises as Soaptian. Now the enterprises in Shunyi Airport Industrial Zone of Beijing belong to office type. There are almost no direct production companies. Enterprises with certain chemical pollution are migrating to other provinces and cities. The staff of the printing printer said.

Relevant person in charge of Shunyi Airport Industrial Zone in Beijing told reporters that with the rise and fall of the industry, some manufacturing enterprises introduced in the early stage of the park are facing the need of transformation and upgrading because of the combination of many factors, such as technological upgrading, market demand transformation, and increasing production costs.

Tang Xin, an independent IT analyst, told reporters that low-end manufacturing is the main reason for the domestic manufacturing industry to move out. And factories like Sony and Samsung are high-end manufacturing industries, which can not represent the case of manufacturing relocation in China. These cases, in fact, reflect the changes in the competition pattern of international high-end manufacturing industry. Traditional high-end manufacturing giants are under pressure to take the initiative to shrink. In short, Chinas high-end manufacturing industry is gradually beating foreign rivals.

From the production point of view of high-end manufacturing industry, domestic industrial chain is the most complete, manufacturing costs and quality are the best balanced, no other country has similar competitiveness. Fuliang revealed that Foxconn is also moving to Vietnam and India. Overall, as Chinas labor costs rise, the benefits of assembly in China are getting worse and worse. Samsung and Sony fled China is also related to their low sales. Now Vietnam is taking over the transfer of manufacturing capacity from China. Samsungs Tianjin factory is moving there, and Vietnams GDP has risen in recent years, which is also the reason why manufacturing capacity has shifted in the past. Liu Xu said. The whole low-value-added industry (such as assembly) is shifting to countries other than China, and this trend is obvious.

Enterprises pursue profits while manufacturing factories pursue low costs. When costs increase, factories will pursue lower cost areas and move to lower cost areas.

In Sun Yanbiaos view, Thailand and Vietnam are now the same as China in 2007. For international brands, the future market is in India, because Chinese consumers have accepted the national brand, but the Indian market does not think so, the original Sony, Toshiba brand is more deeply rooted in their hearts.

(Yu Hui and Liu Xu were aliased at the request of the respondents)