Wednesday, February 16, 2005

China and India: An Opportunity, and A Threat to Western Mobile Industry

From TheFeature: China and India: An Opportunity, and A Threat

"The mobile industry typically thinks of India and China in terms of opportunity -- but the reality is that they are an increasing threat as well. With a combined population of up to 3 billion and rapid predicted growth in mobile usage, much of the talk at 3GSM is about the opportunity in India and China. Yes, vendors realize that they are facing increasingly fierce domestic competitors in the two markets. Take the Chinese handset market, where the domestic vendors now claim over 50% of the market. But the threat that is usually ignored is Chinese and Indian vendors entering European and US markets."

"Moving from the general to the specific, let's take a look at three of China's largest infrastructure players. Huawei, UTStarcom and ZTE earned around 1% of their revenues outside China in 2000; in 2004, the figure is expected to be around 33%. Chinese researchers Norson Consulting expect this proportion to rise to 70% for Huawei, and 80% for both UTStarcom and ZTE by 2008. The majority of international sales for Huawei and ZTE are in mobile infrastructure."

"From Western vendors dominating the Chinese handset market, domestic vendors now claim over 50% (although this figure is hard to assess). What is clear is that the local vendors have used their domestic knowledge to fight back ... . Chinese vendor TCL has already joined the major leagues by forming a joint venture with Alcatel. Formed in August 2004, TCL & Alcatel Mobile Phones (TAMP) is 55% owned by TCL, with Alcatel owning the remaining 45%. Other major Western vendors such as Siemens have also partnered with Chinese vendors to reduce their exposure to the market.
A different approach is being taken by Ningbo Bird, which had total handset sales of around 15 million in 2004, with 3 million outside China. In 2003, it established Bird International in Hong Kong, and grew international sales by 500% in 2004 and has plans to sell 20 million handsets outside China a year by 2006. Its key differentiators have been cost and innovative designs." Read more


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