The effect of the latest personnel reshuffle at TCL Communications, the Hong Kong-listed mobile phone-making unit of TCL International Holdings Ltd, is yet to be seen by the company's future performance in the market, analysts said.

TCL Group, parent of TCL International, announced on Sunday that Yuan Xincheng, chief operating officer of TCL Group was to replace Wan Mingjian as the director of TCL Communications. Meanwhile, Yuan was also named general manager and director of TCL Mobile, which is owned by TCL Communications.

Health problems were the reason for Wang's resignation, according to the company's statement.

TCL Group's announcement came amid a craggy performance of China's stock market which holds back investor enthusiasm.

"We have to adopt a wait-and-see attitude towards the reshuffle as it will only be proven by market performance," said Dai Chunrong, an analyst with China Securities.

Generally, it is normal for a company to adjust its management team while embracing a difficult market performance, she said.

However, some analysts believe the declining business in the past seven successive months was the main reason for Wang's resignation.

As one of the largest equipment makers in China, both mobile phones and home electrical appliances are the two major revenue generators for TCL Group.

Company figures show TCL's mobile phone business contributed a net profit of 456 million yuan (US$54.9 million) last year.

As a leading domestic handset maker, TCL Communications sold a total of 9.8 million handsets last year.

However, the sales of its mobile phones dropped 58 percent in November, a sharp decline compared to the same period last year, according to the company's announcement last Friday.

"We are aiming to revive our mobile phone business through personnel adjustment," Li Dongsheng, TCL Group's board chairman, was quoted as saying by the Beijing Youth Daily yesterday.

According to the company's statement, TCL Communications will expand its development in four major aspects, including to further enhance its research and development and accelerate its process to roll out more new handsets, enhance its management of the supply chain, enhance its internal management and explore market channels.

The shrinkage of market performance can be partly attributed to the ferocious competition this year as many foreign handset makers slashed prices, according to Zeng Jianqiu, a professor at the Beijing University of Post and Telecommunications.

The latest government statistics show domestic handset vendors are losing their fortresses with their market shares shrinking from about 50 percent last year to 38 percent in the first half of this year.

Leading domestic mobile phone vendors including TCL, Bird, Amoi and Kejian all saw diminishing handset sales.

"Tough competition is likely to continue next year," he said.

Some analysts attributed the decline of its mobile phone business to the company's slow convergence with Alcatel's phone business unit.

TCL Communications and Alcatel formed a joint venture in September in Hong Kong, which performs research and development, subcontracting of manufacturing and the sales and distribution of mobile handsets and peripheral devices.

(China Daily December 21, 2004)