In brief: Samsung will no longer sell televisions and home appliances in one of the world's largest consumer markets, China. The reason? Intense competition from local brands and a rapidly evolving business environment.
The South Korean technology giant said it will make every effort to minimize the impact for existing customers, and is reviewing its support infrastructure for business partners. The decision won't affect Samsung's other divisions in the region, meaning they will continue to sell products such as smartphones and tablets as they always have.
The TV industry has been historically tricky to navigate, and Samsung has struggled as of late. According to The Wall Street Journal, the company's TV and home appliance divisions lost roughly $138.4 million last year.
As Linus Sebastian from Linus Tech Tips recently highlighted, most TV makers nowadays actually lose money on hardware at the time of sale. Where they make money is on the software side – specifically, by selling ads through partnerships with streaming services and the like. That's why it is nearly impossible to find a new television without built-in smart platforms – there's no money in it.
The ad platforms give TV manufacturers an incentive to sell more sets, even if they have to do so at a loss. Have you ever noticed that TVs have gotten cheaper over the years despite being bigger and better than ever, while virtually every other electronics category has gone up in price? This is why. The more TVs you have in your home, the more money they stand to make from advertising on these digital billboards.
Samsung didn't command a significant share of the TV and appliance market in China, but the pullout could be a sign of things to come in other regions where the company is struggling with sales.
In related news, Samsung earlier this week appointed a new head for its visual display business. It is unclear if the China announcement is a direct result of the new leadership, but the timing certainly suggests so.