Nokia makes comeback in China — MobileMonday Global: Industry News

^{USD 8.7 billion market} Nokia makes comeback in China

20 Sep 2004 at 04:47 GMT Timo Poropudas

Global mobile phone makers have won back customers from upstart local rivals in China’s hotly contested mobile phone market. Reports Xinhuanet. Now they have to contend with a slowing economy, a price war and depressed sales.

Nokia now leads the Chinese pack with a 15.5-percent market share at the end of June, closely trailed by Motorola at 14.1 percent. Samsung comes in third, according to JP Morgan. Bird, which claimed controversially to have overtaken the foreign makers last year, ranks fourth, according to analysts.

The world’s top three mobile makers have staged a comeback this year, in a market analysts expect to grow about 12 percent to USD 8.7 billion this year.

Nokia, Motorola Inc. and Samsung Electronics Co. had lost ground in China to local mobile phone manufacturers who emerged in 2000, according to Shen Zhen Daily.

But their efforts to fend off domestic rivals such as TCL Corp. and Ningbo Bird have touched off another round of price cuts, just as sales are slowing.

“I believe the price war will continue,” said Ann Liang, a Taipei-based analyst at Gartner according to Shen Zhen Daily.

“We’re expecting September sales to bounce back somewhat, but the government’s economic cooling effort is the biggest external reason for so-so sales in summer.”

The market share of domestic mobile phone makers — including top players TCL, Ningbo Bird and Amoi Electronics — dipped to 43.8 percent in June, JP Morgan said, after peaking at 46 percent in December.

Buyers and sales people attribute the Chinese makers’ slide to quality problems, coupled with price cuts and aggressive expansion into smaller cities by the foreign manufacturers.

The price war has been driven by Nokia, which slashed prices worldwide after losing market share to other rivals in the first half of 2004.

Domestic news reports say the Finnish firm has cut prices by as much as a quarter on some models in Guangzhou, Xinhuanet reports.

A Nokia spokeswoman said the firm abided by global pricing policy and did not discount prices just for the Chinese market.

Analysts claim that Chinese makers would take the biggest hit because expensive phones with flashy digital cameras and sharp color screens would be less sensitive to prices.