Sony Corporation has relocated some of its premium smartphone production from China to Thailand as the Japanese electronics giant seeks to cut labour costs and make use of export tax incentives.
The relocation is illustrative of the continued rise in labour costs in China, as well as the abundance of locally made electronic components with affordable prices in Thailand and attractive tax benefits, said Satoshi Mekata, general manager for the mobile sales division of Sony Thai.
"We're gradually moving a part of our China production for premium smartphones to the Thai factory in Pathum Thani, with the relocation having started earlier this year," he said.
The Pathum Thani factory began operations in 2015 with 4,000 employees. The facility was especially designed to produce mid-range smartphones for export, with prices in the neighbourhood of 16,900 baht each.
Mr Mekata said the Thai factory started production of the premium smartphone model, Xperia XZs, earlier this year.
The Chinese facility is still operating in parallel with the Thai factory.
Sony also has another production facility for semiconductors in Bang Kadi, Pathum Thani, plus a camera factory in Chon Buri.
Mr Mekata said Sony thinks the Thai factory will provide a more competitive price for existing premium smartphones.
For instance, the Xperia XZs model made in China sold for 23,000 baht previously. The model produced in Thailand is selling for 21,990 baht.
Mr Mekata foresees slower growth for smartphones priced at 18,000 baht and up, as premium phone users are extending the life cycle to at least two years.
In addition, there are no major changes in the premium smartphone segment.
"We expect the premium smartphone market to grow by only 10% this year, compared with 20-30% in the past several years," Mr Mekata said.
The premium smartphone segment accounted for less than 20% of the 16 million smartphones sold in Thailand in 2016.
Mr Mekata said Sony will remain focused on the premium smartphone segment, in which the company ranks No.4 in the local market after Apple's iPhone, Samsung and Huawei.
Sony has just a 2% share in Thailand's overall smartphone market.
Mr Mekata acknowledged that competition in the local smartphone market is intense. Sony has tried to provide advanced technologies culled from the group's businesses, such as screen displays, cameras and sound.
Sony yesterday introduced a premium Xperia XZs model that it dubbed the world's first smartphone offering super-slow-motion video, offering a new user experience in mobile video access.
The company also rolled out a mid-range smartphone, the Xperia XA1, priced at 8,490 baht. The smartphones will become available on April 23.
In other news, Thai Samsung Electronics unveiled its much-touted premium Samsung Galaxy S8 and S8 Plus, priced at 27,900 and 30,900 baht. The phones are scheduled to hit the Thai market on May 5.