Thursday, July 28, 2005

Alarm Bells Ring for Chinese Cellphone Makers

From Reuters: Alarm bells ring for Chinese cellphone makers

"Global cellphone giants like Motorola Inc. and Nokia N.V. have got their act together in China, putting pressure back on the home-grown rivals who stole the initiative in recent years."

"Analyst say that by late last year, the multinationals finally learned how to compete with the likes of China's TCL Communication, Ningbo Bird and Kejian in a market that buys one of every eight cellphones sold worldwide.
Copying the local groups' business models, Motorola and Nokia have introduced low-end models this year and strengthened their distribution in less affluent smaller cities and towns that are home to the majority of China's 1.3 billion people.
As a result, domestic handset makers have seen their combined share of the China market drop to 38.3 percent in June from 41.2 percent at the end of last year, off from a peak of 58.7 percent by the end of 2003, according to Norson Telecom Consulting."

"Analysts said the domestic malaise is likely to continue for much of the next year, as many smaller players bow out of the industry altogether or are forced into bankruptcy, and a few major manufacturers survive.
China is the world's biggest cellphone market by subscribers, with 350 million, and 100 million units are sold into the market every year. A recent survey put sales worldwide this year at 779 million."

Read more:
China's Biggest Cellphone Maker, Ningbo Bird, Plunges into Red
UTstarcom Gets Licence to Make and Sell GSM and CDMA Handsets in China