US-based telecommunications giant Motorola Inc. is interested in entering China's largest mobile phone maker TCL, as the talks are still going on, Thursday's 21st Century Business Herald reported.

TCL Corporation publicized a statement on Monday, disclosing that it is engaged in a strategic swap, which, according to a close source to TCL's management as quoted in the Beijing-based newspaper, involves the cell phone business.

Potential partners are hiring investment banks to do market research for the entry, and, of them, Motorola retains the closest contact, the source disclosed, who, however, is not specified in the report.

TCL's phone-making unit, TCL Mobile Communications Co Ltd, confirmed yesterday it is in talks with Motorola, but saying the results are still unclear.

Also yesterday, TCL's president Li Dongsheng said the group is introducing a new strategic investor and expects the work to be completed by the year-end.  The new shareholder will be a giant in the electronic field, which Li anticipates to aid TCL on the progress of overseas expansion.

Market analysts pointed out the new investor, or reportedly the takeover of the mobile phone unit, will help TCL relieve the financial pressures from the ailing phone business.

As in its latest financial report, the phone business counted a net loss of HK$460 million (US$59 million) in the first three quarters, three folds of HK$147 million of a year before.  This has dragged down the overall performance of the group, which suffered a loss of 446 million yuan (US$55 million) in the third quarter, adding to the total three-quarter loss to 1.1 billion yuan.

Despite that, TCL's advantage at the second-line market of China will help Motorola to exploit into the broad hinder land market, which is blamed for the US phone maker's lagging behind its Sweden rival Nokia, analysts pointed out.

Motorola has lost its No. 1 position on China's phone market to Nokia with its share in the GMS phones sector outstripped by 7 percentage points, the 21st Century Business Herald report said, citing statistics from Germany-based market research firm JFK, which is specialized in phone sector. 

Its share on the fledgling CDMA phone market is only half the size held by South Korean phone maker Samsung.

(Shanghai Daily December 2, 2005)