China Becomes Global Battleground for Mobile
Handsets
China, with more than 300 million mobile phone subscribers,
is now the world's largest single market for mobile phones
and services. Now, it is becoming the single largest exporteer,
and Chinese and non-Chinese makers are getting set to
do battle, to determine whether market direction will
be determined by the non-Chinese or Chinese makers.
According to Chinese government figures, China exported
51 million handsets worth US$5.9 billion in the first
five months of 2004. These figures combine handsets made
by Chinese and non-Chinese makers in China. Because of
the country's low manufacturing costs, all makers, including
Nokia, Siemens and Motorola have research and product
development centers in China. Nokia has announced that
40% of the mostly low-cost handsets produced by its Mobile
Phones Business Group will be designed and developed by
its Beijing Product Creation Center.
Nokia is struggling from a series of missteps,. the most
important of which was its failure to adopt the popular
clamshell design for mobile phones. This caused the company
to lose significant market share in the first quarter
of 2004, with Sony Ericsson, Samsung and the Chinese makers
winning. Motorola has also shown early signs of reviving
in the marketplace, and plans product launches of new
models in the second half of 2004.
The development of the Chinese market has been helped
by China's aggresive adoption of new technology standards
for mobile communications. In China's case, technology
standards in the past were largely aggressively pushed
and adopted by MII, the Ministry of Information Industry.
Now, market forces have come into play and subscriber
demand has pushed rapid-fire changes in the marketplace.
The Chinese companies have the advantage when it comes
to launching new models, and for distribution. In some
cases, these have developed into alliances, such as Siemens
selling its phones through Bird's retail network of more
than 30,000 stores. So far, the leading foreign brands
have tried to occupy the mid to high-end of the market,
while the Chinese makers are going for the low- to middle-end.
But there are signs that they will soon be going into
each other's price territory.
On the technology side, CDMA has shown rapid growth in
China. While CDMA had only 4 million subscribers in 2003,
it has since grown to more than 30 million. It has mainly
been used by the early adopters in China, who prefer it
for its quicker access to the Internet than the predominant
GSM standard.
On a recent trip to Beijing, this writer noticed the
large marketing efforts going into mobile phone models
targeted specifically at young fashion-conscious women.
The most heavily marketed model in Beijing now is the
Nokia 7200, whose posters can be seen throughout the Beijing
Underground and on buses throughout the city. While it
does not have any exciting new technology features, it
does have an attractive design to attract young women.
To go with the design of the phone, a line of women's
handbags and fashion accessories have been designed to
match with the phone.
The phone sells for RMB4,000 (US$481). It is not yet
available in the US.
Another phone model has a vanity mirror on the outside
shell, so that's user can use it to check her makeup.
This model, made by Samsung, is also not yet available
in the US.
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