Nokia's mainland China distribution channels are breaking down, according to a middle manager in Nokia China's sales department, who said that resellers nationwide began to refuse shipments for the first time ever beginning in April. The source said that because resellers are refusing new shipments, Q2 2011 performance is expected to be poor.
Nokia's factories failed to anticipate demand in Q4 2010, leading to a serious shortage and scheduled shipments were delayed 6-7 weeks, with some orders not being met until Q1 2011. Although Nokia's fiscal report claimed that growth was steady during this period, the late shipments arrived at reseller and distributor warehouses, but were never sold on to the consumer. While Nokia's quarterly results were saved, according to the source, few resellers or distributors turned a profit. The source said that while in the past resellers could do a full turn in 3-4 weeks, the time it takes to sell their inventory before taking a new shipment has gradually lengthened, eventually reaching 11 weeks in Q1 2011, with little optimism that the situation will improve.