Shanghai Securities News, 12/05/07
MII's Economic Reform and Economic Operation Department has revealed that market share for domestic-brand mobile phones fell to 33.8% in Q3 2007, down two percentage points since the end of 2006. The 38 mainland handset manufacturers sold 78.71 million GSM phones, accounting for 22.6% of the GSM market - less than two thirds of Nokia's market share.
There are three reasons behind the fall: First, a lack of mastery of core technologies mean that it is hard for domestic manufacturers to reduce costs and compete on price. In Q3 2007 the average cost of a mobile phone fell between four and seven percentage points. Secondly, new products are slow to come to market, and there are not enough models on the shelves. In Q3 2007 domestic brands accounted for 36% of the mobile phone models available - thirty percentage points less than foreign brands. Finally, scale of production tends to be small, with problems of undersupply. In the last three quarters 17 domestic firms - 44.7% of the total - sold over two million handsets, 5 (13.2%) sold between one and two million and 16 (42.1%) sold under one million.