China United Telecommunications Corp plans to pay out 3 billion yuan (US$371 million) to purchase 3 million Code Division Multiple Access phones next year in an effort to boost its stockpile and its CDMA business, Monday's Beijing Times reported.

The company, China's No. 2 mobile telecom operator and the sole provider of CDMA service, held a beauty-parade over the weekend in Changsha, the capital of central China's Hunan Province.

Phone suppliers thronging the fair included the 12 that have entered Unicom's bidding process, namely Nokia, Motorola, Samsung, LG, Kyocera, UTStarcom, ZTE, Huawei, Yulong, Daxian, Haier and Hisense, and three that have not, namely Amois, Dibit and Dopod.
China Unicom has set up a CDMA handset-sales subsidiary to conduct the massive phone purchase, a way to boost its CDMA business by linking-up the phone suppliers and retailers.

The purchase plan, ammounting to the equivalent of one-third of China's yearly CDMA-demand of 10 million handsets, has pushed China Unicom to the dominant position in the market, according to Yu Yingtao, general manager of the subsidiary company.

In Shanghai, it accounts for nearly all CDMA phone supplies and 85 percent of retail sales, said an industry insider cited by the Beijing Times report.

In addition, the bulk-purchase will push down the retail price of CDMA phones, Yu said.

More than 60 percent of the 3 million phones planned for 2006 will be priced at the mid-range of 1,000-1,500 yuan, a sign that China Unicom will be focusing on the mid-market.

It will also increase supplies of low-end phones priced at below 500 yuan so as to lower the threshold for CDMA business.

The company will continue to subsidize service fees so as to attract users, Yu added.

(Shanghai Daily November 17, 2005)