Communications World Weekly, 11/26/07
With commercial use of TD-SCDMA imminent, competition and consolidation are rife in the handset retail sector. One industry expert who preferred to remain anonymous believes that traditional agents such as China P&T Appliances, mobile phone specialists such as D.Phone and Zoomflight, general appliance retailers such as Gome, Suning and Dazhong, operator-owned channels and new direct TV sales channels will use the advent of TD-SCDMA to attempt to carve out larger market shares.
Figures show that market share for traditional agency channels such as P&T Appliances and Telling (000829.SZ) has dropped to about 30%. Specialized retailers such as D.Phone and Zoomflight are holding steady at slightly over 30%. Operator-customized phones have allowed China Mobile's (NYSE: CHL; 0941.HK) Dingxun and China Unicom's (NYSE: CHU; 0762.HK; 600050.SH) Huasheng to take a 20% share of the market; while appliance chains Gome (0493.HK), Suning and Dazhong are in the process of expanding their market share, currently at about 13%. Manufacturers' own channels and new channels such as TV and Internet sales account for about 7% of the market.
Direct supply and sales from manufacturers means that traditional nationwide agencies no longer dominate the market, and they are losing influence in major cities and the eastern coastal areas - although they retain their traditional strengths in central and west China, and in smaller cities. Specialized retailers are feeling the pressure from general appliance retailers in first- and second-tier cities and are therefore expanding to smaller cities and the rural market. Appliance retailers are using their existing outlets to seize the advantage in first- and second-tier cities, but their network does not stretch to the outskirts of those cities, or to smaller cities, where they therefore have no market share.
Keywords: mobile phone distribution China P&T Appliances D.Phone Zoomflight Gome 0493.HK Suning Dashong Dingxun Unicom Huasheng Telling market share operator-customized handset China Mobile CHL 0941.HK China Unicom CHU 0762.HK 600050.SH wireless 000829.SZ