The decision of BKSE Bokwang Suzhou E&T Co. Ltd. to shutter its Wujiang factory in June has left both workers and local authorities still reeling from its effect.
Once the largest printed board assembly maker for Samsung Electronics Co. Ltd., the South Korea-based BKSE had at one point employed up to 1,000 workers, according to a report from the China Daily newspaper on Monday. But before closing, that number had been whittled to just 600 as the company struggled to compete against cheaper rivals and grappled with sluggish sales of smart devices worldwide.
The company employees were originally instructed to take a one-week holiday, but the factory never reopened, the report said.
The closure has also puzzled authorities at the Wujiang Economic and Technology Development Zone in Suzhou, Jiangsu Province.
"We were totally unaware of the operation of this company in recent years," said Zheng Yi, deputy director of the administrative committee of the zone, adding that they only learned from the employees that BKSE was working solely for Samsung and that orders had dropped dramatically.
Workers made redundant were given compensation based on the number of years they worked for the company.
"When they decided to close the factory, it came as a total surprise," Zheng, a workshop director, told China Daily. "The company was our pride and joy."
According to the labor team of BKSE Suzhou's parent company, BKE&T, the company had applied for bankruptcy protection in South Korea in response to the falling sales from Samsung.
In the second quarter, Samsung reported that profit was down by 4 percent to $6.13 billion globally compared to the same period in the past year.
Shares of the smartphone giant also dropped significantly to 9.3 percent in the first quarter of 2015 compared to 18 percent in the same period in 2014, according to market consultancy firm IDC.
Increased competition from Chinese companies, including Huawei Technologies Co. Ltd., Xiaomi Corp. and Lenovo Group Ltd., were also to blame, China Daily said in its report.
"Although there were no orders for that month, all of us were still working as usual before the company announced the closure of the factory on June 23. It was a massive blow," Zheng said.