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Global mobile phone makers have won back customers from upstart local rivals in China’s hotly contested mobile phone market. Now they have to contend with a slowing economy, a price war and depressed sales.
Nokia, Motorola Inc. and Samsung Electronics Co. had lost ground in the world’s biggest mobile phone market to local mobile phone manufacturers who emerged in 2000.
The world’s top three mobile makers have staged a comeback this year, in a market analysts expect to grow about 12 percent to US$8.7 billion this year.
But their efforts to fend off domestic rivals such as TCL Corp. and Ningbo Bird have touched off another round of price cuts, just as sales are slowing.
“I believe the price war will continue,” said Ann Liang, a Taipei-based analyst at Gartner. “We’re expecting September sales to bounce back somewhat, but the government’s economic cooling effort is the biggest external reason for so-so sales in summer.”
The market share of domestic mobile phone makers — including top players TCL, Ningbo Bird and Amoi Electronics — dipped to 43.8 percent in June, JP Morgan said, after peaking at 46 percent in December.
Nokia now leads the Chinese pack with a 15.5-percent market share at the end of June, closely trailed by Motorola at 14.1 percent. Samsung comes in third, according to JP Morgan. Bird, which claimed controversially to have overtaken the foreign makers last year, ranks fourth, according to analysts.
The rankings are important because China accounts for a growing share of the global handset market. Motorola derived 10 percent of its global sales from the country last year.
Buyers and sales people attribute the Chinese makers’ slide to quality problems, coupled with price cuts and aggressive expansion into smaller cities by the foreign manufacturers.
Analysts say the price war has been driven by world-leader Nokia, which slashed prices worldwide after losing market share to Samsung and other rivals with more attractive models.
Domestic news reports say the Finnish firm has cut prices by as much as a quarter on some models in Guangzhou.
“Nokia wants to gain market share back quickly,” Liang said.
A Nokia spokeswoman said the firm abided by global pricing policy and did not discount prices just for the Chinese market.
The brutal competition is already eating into profits.
TCL posted a disappointing 7.8 percent rise in second-quarter net profit in August after price cuts in the domestic market offset a rise in overseas sales.
Bird reported a meagre 5 percent rise in second-quarter profit, also citing stiff competition.
Analysts said firms such as Samsung and Sony Ericsson selling expensive phones with flashy digital cameras and sharp color screens would be less sensitive to prices, while Chinese makers would take the biggest hit.
(Shenzhen Daily September 20, 2004)
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