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Japanese camera manufacturer Olympus Corporation is discontinuing its manufacturing operations in China, 27 years after setting up a factory in Shenzhen.(CGTN)|
The company, which at its peak hired 15,000 employees at the Guangdong Province site, said in a statement on Monday that its decision came after “a rapid contraction due to the rise of smartphones” in the digital camera market, as well as outdated equipment that had deteriorated after 26 years.
Olympus will move its entire digital camera business to its other plant in Vietnam’s Dong Nai Province, to enhance “production efficiency and profitability” as well as “global competitiveness,” according to the statement.
Nearly 1,800 people were in employment at the factory, the closure of which comes after fellow Japanese camera maker Nikon announced last October that it was closing its compact digital camera factory in Wuxi, leaving 2,200 workers unemployed.
Nikon also blamed the rise of the smartphone, after confirming that it was moving some of its production lines to Thailand and other destinations.
While Olympus continues to make digital cameras, it has refocused its business towards medical equipment after years of making losses. The company now has 70 percent of the global market share in producing endoscopes – high-tech cameras inserted into the body during operations and other medical procedures.
Olympus was the world’s biggest producer of digital cameras in 2001, but its sales peak in 2008 of 10.8 billion US dollars coincided with the launch of the first iPhone, and shipments gradually slumped from that point on.
In 2011, Olympus saw what the Wall Street Journal described as “one of the biggest and longest-running loss-hiding arrangements in Japanese corporate history,” when it was revealed that bosses had covered up 1.7 billion US dollars’ worth of losses since the 1980s.
The plant in Shenzhen, which sold just over 980,000 cameras last year, was accused in 2016 of bribing Chinese customs officials to ignore falsified information regarding the number of cameras it had in stock. Olympus denied the accusations, but admitted to “wining and dining” a customs official and giving gifts.
Several multinationals have shifted operations from China to Vietnam and other Southeast Asian countries in recent years, with sportswear manufacturer Puma saying last month it was preparing “contingency plans” to move production, citing China-US trade tensions and “rising labor costs.”
Worker salaries in Vietnam are considerably lower than China, with the minimum wage in Ho Chi Minh City and Hanoi 172 US dollars per month.
In Shenzhen, the minimum monthly wage was set at 2,000 yuan (314 US dollars) in March, according to China Daily.
Other factors that make Vietnam an attractive manufacturing base for companies like Olympus include no caps on foreign ownership, free trade agreements with blocs like the European Union and projections that it will have the fastest growth in Asia up to 2050, according to PricewaterhouseCoopers.
However, while Chinese workers now command higher salaries, the country’s population means that its skilled workforce dwarfs others in the region.
Only nine percent of the 55.9 million-strong Vietnamese workforce has higher education qualifications. China on the other hand saw eight million students graduate in 2017 alone, while a 2016 China Daily report claimed the country has more than 33 million workers that can be considered “highly skilled.”