Home / Business / Technology Telecom Tools: Save | Print | E-mail | Most Read | Comment
Mobile phone makers dial themselves brand new marketplace
Adjust font size:

Mobile phone makers will face a "shuffle" of market positions after China announced two weeks ago that it would relax license regulations for handset manufacturing.

 

Put simply speaking it means that a heap of new players, most of them with unknown brands, will appear in the world's biggest cell phone market.

 

China's State Council has abolished some 186 administrative examination and approval items covering mobile communication systems and terminals. The move indicates that the country will formally cancel the mobile phone production license examination and approval system, which started about a decade ago.

 

Chinese companies intending to manufacture phones had to have at least 200 million yuan (US$26.31 million) in registered capital and get approval from the National Development and Reform Commission (NDRC). Then, if they wanted to sell phones in China, manufacturing companies had to have their products quality tested and authorized by the Ministry of Information Industry (MII).

 

Now with the altered regulations, the NDRC is not involved in the process and handset makers can sell phones after passing the MII test.

 

"The omission of the NDRC shows the government is willing to establish a market-oriented industry environment," said Kevin Wang, an analyst for the US-based research firm iSuppli.

 

China has licensed 90 firms to produce mobile phones with an annual production capacity of 600 million units, 50 percent over the combined domestic demand of 100 million units and export demand of 300 million units, according to MII.

 

Long period

 

"The oversupply has existed for a long period and it's not necessary for a government regulation," said United Securities Co in a recent note.

 

Now is the time to let the market rule and see qualified new players replace the market positions held by established companies which depended heavily on the income from renting licenses to other companies, according to United Securities.

 

The new players, largely unknown by established industry players, have challenged and even surpassed leading domestic firms like Ningbo Bird and TCL Communications.

 

"Tianyu is new star in the industry with its strong experience in electronics retail industry," said Wang.

 

Tianyu, the Beijing-based handset vendor, is expected to sell 13 million mobile phone units in 2007, a 113.1-percent growth year-on-year to become China's No. 3 OEM (original equipment manufacturer) maker. Bird, which led the OEM market in 2006, is expected to sell 12.5 million units this year and will come in at No. 4 position behind Tianyu, according to iSuppli.

 

"Tianyu uses heavy promotional methods in smaller cities such as offering high under-table commissions to traders. It is not the traditional way to compete," said a Nokia China official.

 

The Nokia official admitted that Nokia's sales had been affected by new brands like Tianyu in the second or third-tier markets.

 

ZTE and Huawei, which focused on telecom equipment market during the handset license period, are expected to become the top two OEM handset makers in China. ZTE is expected to sell 23 million phones in 2007, a 215.1-percent growth year-on-year, according to iSuppli.

 

Foreign-brands, which haven't established a foothold in China, are also eager to penetrate the domestic market after the loosening of the regulations.

 

Research In Motion (RIM), the developer of BlackBerry, will sell its popular Email phones in China by the end of this year through the distribution partner Alcatel Lucent, the companies announced this week.

 

"BlackBerry will grab market share in the high-end market and influence brands like Dopod, Nokia and Motorola," said Sandy Shen, an analyst at US-based Gartner Inc.

 

Other foreign giants like Hewlett-Packard and Palm, also intend to sell phones directly in China in future.

 

Fierce competition

 

Traditional market leaders, like Bird, TCL and Amoi, have suffered from the fierce competition.

 

Bird posted a loss of 237.2 million yuan (US$31.18 million) in the first half and Amoi reported a loss of 350 million yuan in the first six months.

 

The "black phones" - handsets sold in the market without government approval - are also expected to become legal under the new regulations.

 

From January to June, 23.43 million "black phones" were sold in China, compared with 71.47 million licensed handsets, according to CCID Consulting, a research firm under MII.

 

Some of these phones will become legal but others, including copies of famous brands and low quality models, will not as they not want to take the MII quality test, according to Jiang Lifeng, a CCID analyst.

 

The new policy will attract more players and boost related phone design sectors and this trend will accelerate China's transition from a manufacture base to a design center, according to Wang.

 

(Shanghai Daily October 26, 2007)

Tools: Save | Print | E-mail | Most Read
Comment
Pet Name
Anonymous
China Archives
Related >>
- Mobile phone users top 515 mln by August
- Mobile phones see rapid growth
- Mobile market moves under full stream
- China may skip phone generation
Most Viewed >>

Nov. 1-2 Tianjin World Shipping (China) Summit
Nov. 7-9 Guangzhou Recycling Metals International Forum
Nov. 27-28 Beijing China-EU Summit
Dec. 12-13 Beijing China-US Strategic Economic Dialogue

- Output of Major Industrial Products
- Investment by Various Sectors
- Foreign Direct Investment by Country or Region
- National Price Index
- Value of Major Commodity Import
- Money Supply
- Exchange Rate and Foreign Exchange Reserve
- What does the China-Pakistan Free Trade Agreement cover?
- How to Set up a Foreign Capital Enterprise in China?
- How Does the VAT Works in China?
- How Much RMB or Foreign Currency Can Be Physically Carried Out of or Into China?
- What Is the Electrical Fitting in China?