Samsung Electronics Co. Ltd. has shut down its last smartphone factory in China amid intensifying competition from local rivals and a rise in labor costs in that country.

Samsung’s decision to pull out of China wasn’t unexpected, since the company had already cut production at its last factory in Huizhou in June and suspended operations at another facility last year, Reuters reported today.

Other smartphone makers, including Sony Corp., have also pulled out of China in recent months. However, Apple Inc. continues to manufacture the majority of its devices in China.

Samsung has notably also struggled to sell its devices in China in recent years. In mid-2013 it owned a 15% share of China’s smartphone market, but that has since fallen to less than 1% thanks to increased competition from local brands such as Huawei Technologies Co. Ltd. and Xiaomi Corp.

“In China, people buy low-priced smartphones from domestic brands and high-end phones from Apple or Huawei. [so] Samsung has little hope there to revive its share,” Park Sung-soon, an analyst at Cape Investment & Securities, told Reuters.

Analyst Charles King of Pund-IT Inc. told SiliconANGLE that Samsung’s decision to close down its smartphone manufacturing operations in China was understandable since its products are no longer perceived as being superior to those of local brands.

“Toss in the Chinese government encouraging citizens to support local companies and things are looking increasingly bleak for outsiders,” King said. “It has to be painful but Samsung deserves kudos for recognizing that its situation is unsustainable, and pulling the trigger on its own terms.”

Patrick Moorhead of Moor Insights & Strategy pointed out that it’s important to separate market share from the point of production, however. He noted that Samsung will continue to sell its smartphones in China in spite of its low penetration there.

“I view this as a smart supply-chain move by Samsung to lower risk from manufacturing in China,” Moorhead said. “By moving all its manufacturing out of China, the company doesn’t have to worry about any of the embargoes or tariffs levied by the U.S.”

That’s in line with Samsung’s own view. The company said in a statement to Reuters it had taken the “difficult decision” in an effort to boost efficiency. “The production equipment will be re-allocated to other global manufacturing sites, depending on our global production strategy based on market needs,” it said in a statement, without elaborating.

Samsung has in recent years expanded its manufacturing operations to other countries with lower labor costs, notably India and Vietnam, Reuters said.

“The world’s smartphone preferences are changing and in some cases they’re changing so substantially that the supply chain needs to adapt,” said Holger Mueller, an analyst with Constellation Research Inc. “That’s the case for Samsung, which was once a market leader in China and now closing its last factory. But with the economic uncertainty of the U.S./China trade war this is probably a smart move.”

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