Rumor: Samsung to Go Direct with Chinese Handset Retailers
21st Century Business Herald, 11/17/10
Senior management at Chinese mobile phone distributor Funtalk (Nasdaq: FTLK) has revealed that beginning December 1, Samsung will begin directly distributing handsets to retailers. Four major consumer electronics retailers - Suning (002024.SZ), Gome (0493.HK), D.Phone, and Funtalk - as well as 200 other retailers with sufficient sales volume will join the direct distribution network.
The network will cover Beijing, Shanghai, Guangzhou, Shenzhen and other first-tier cities as well as prefecture-level cities with comparatively large sales volume. Once deployed, Samsung will continue to maintain old distribution channels alongside the new system, with some handsets exclusively provided through direct distribution, primarily for key urban markets, while some will be distributed through both direct channels and national distributors, primarily those for second-tier and prefecture-level cities. Some handsets will be exclusively distributed through national distributors, mainly for rural markets at the county-level or below. Beginning December 1, however, Samsung's best resources will be dedicated to the new direct system.
The launch of the new system is already beginning to adversely affect some national distributors, such as Beijing Pypo Technology Group, a subsidiary of Funtalk, and Telling (000829.SZ), which have already begun restructuring their Samsung sales teams. According to a source at Shenzhen Aisidi Industry (002416.SZ), once the system is online, Aisidi will primarily serve rural markets with fewer customers, as Samsung previously accounted for more than 60% of Aisidi's total revenue, mostly from first-tier cities. According to a VP at one of China Postel Mobile Communications Equipment's provincial branches, Samsung handsets account for almost 20% of Postel's volume, and the new system will reduce those revenues.
Keywords: Samsung D.Phone handset distribution rural wireless 000829.SZ PYPO Suning China Postel Telling Aisidi sales volume 002024.SZ 0493.HK Funtalk FTLK retail 002416.SZ 1st tier 2nd tier
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