The Ministry of Industry and Information said China witnessed a significant slowdown in mobile phone production in the first quarter of this year, as a result of the ongoing upgrading of product.

Between January and March, 141.29 million mobile phones were produced, a growth of 6.7% on the same period of last year. But the growth rate was 27.8 percentage points lower than the year-earlier level.

Motorola, a major producer which has operations in northern and eastern China, was said to be largely responsible for the the production decline in Tianjinand in Zhejiang, an eastern province.

Tianjin recorded RMB19.8 billion yuan ($2.8 billion) in revenues on mobile phone production in the first three months, down RMB5.2 billion yuan, or 20.8%. Zhejiang’s revenue on mobile phone manufacturing was RMB7.46 billion, down RMB6.4 billion, or 46.2 percent.

In 2007, China produced 548 million mobile phones. This is now a nation with more than 500 million mobile phone users. But and this is important, they are almost all G2 standard users. With the release of the home-grown G3 — TD-SCDMA — this is biggest market in the world for new, improved, and slightly more profitale, mobiles.

Nothing much will happen until the middle of the year and then you can expect to see the figures zoom.

There is no information as to whether our model is holding one of the new mobiles. And, frankly, it does not matter.
Source: China Daily

China Mobile seems set lend its support to LTE, the wireless broadband standard that may well be the base for 4G technology.

LTE, or Long Term Evolution, is looking more and more likely as the next generation wireless technology to provide super-fast web surfing on mobiles. (The phones themselves will probably not look that different. Something like our illustration seems probable.)

Arun Sarin, Vodafone’s chief executive, said the UK group would join China Mobile and Verizon Wireless, the second-largest US mobile operator, to promote LTE.

It suggests LTE will emerge as the leading 4G technology, rather than WiMax or Ultra Mobile Broadband, which are the main alternatives.

All of this will start to happen around 2010.

Olli-Pekka Kallasvuo, chief executive of Nokia, the world’s largest handset maker, said: ‘I see LTE as being the main fourth-generation technology.’

It is possible that other systems will run in tandem but, more and more, it looks as though 4G will be a form of LTE.

This puts China in a slightly odd position in that it has not yet got 3G out of the door. Take it that must happen this year otherwise China will be breaking its promise about it being a technology-driven Olympics and that is not likely to happen.

But it will be a limited launch and take-up of 3G simply because the Chinese government has been hoping that a home-grown version would be ready and running in plenty of time. That did not happen.

Which means that China will only be seriously covered for 3G by next year. Which gives the phone companies very little time to recover their investment before 4G is upon them in the form of LTE.

As this item was posted a press release arrived which stated:

China Mobile announced today that it is set to join LTE (Long Term Evolution) trials already beingcarried out by Vodafone and Verizon Wireless, a joint venture of Verizon Communications and Vodafone.

Source: Financial Times

Business Week has a longish, fascinating article on the fact that Chinese technology companies making everything from semiconductors to cell phones but mainly doing it for other people.

Even selling in China they have problems. Cell-phone makers TCL and Ningbo Bird have seen their share of the mainland market eroded by Nokia and Motorola.

Profit margins at telecom equipment makers Huawei Technologies and ZTE have dwindled away. BOE Technology Group, the country’s biggest maker of liquid-crystal displays used as screens for PCs and TVs wants a government bailout.

Anywhere you look the picture is not overly promising. Even Lenovo is struggling overseas.

Lenovo’s acquisition of IBM’s PC division in 2005 led to predictions that it would become one of the major players in markets outside China. Lenovo remains the leader in China but is falling behind big competitors abroad. It is betting on the Olympics to pull it to number three postion worldwide. Perhaps.

On April 19, Lenovo said it was firing 1,400 people, or about 5% of its global workforce, with most of the cuts coming out of Europe and the U.S. ‘We have more work to do,’ said Rory Read, president of Lenovo’s Americas group. ‘We have strong competitors out there.’

One of the problems is government interference. ‘Every local government wants to go into high tech,’ says Pranab Kumar Samar, an analyst in Hong Kong with Daiwa Institute of Research. But it means that logistical problems come into play and it is often not the right business decision even though it may be a right political decision.

This all sounds doom and gloom but it is not. It took the Japanese decades to work their way to global dominance. And they still have their problems.

What China has is a huge home base for future forays into overseas markets. It may happen a little later than was thought in the initial excitement.

‘There was a lot of excitement about Chinese technology companies’, says Frank Lee, an analyst with Deutsche Bank (DB), but Chinese policymakers ‘underestimated what it would take.’
Source: Business Week

To make it in mobile phones you have to be very, very big or very, very specialised. Quite large is not good enough. Sort of different, does not help. Even our model, either catching or throwing her Panasonic, is not going to change the sales picture enough.

And so we have NEC of Japan, Taiwan’s BenQ and China’s Ningbo Bird in strife for they simply do not have the scale of production and distribution to compete with leaders like Nokia and Motorola.

Just possibly some could survive by doing major partnership deals with the companies who are making the momey, the telecoms carriers. Japan’s top mobile phone supplier Sharp works with Britain’s Vodafone while Toshiba has partnered with Orange in Spain and France. But there is no suggesion of exclusivity. I use the Vodafone network in Britain, but on my Nokia. My son uses Orange, but on another Nokia.

Bengt Nordstrom, chief strategy officer with research firm inCode, said, ‘The trend is that regional players are struggling and global players are winning. For a smaller Asian handset maker to compete with Motorola and Nokia in the low-end segment is almost mission impossible.’ (Incidentally, Google has worked out the figures and has categorically denied it will ever launch a mobile phone. Software working on such a phone, yes. A mobile phone, no. Possibly Apple, with its mad fanatical followers is the only company that could pull off this trick. Certainly Microsoft would not be in the race.)

Some of the small players, especially in South Korea, have nearly gone. Pantech and Curitel look sick while VK Corporation, once known for its ultra-slim phones, was placed under court receivership this month.

BenQ, Taiwan’s top mobile phone vendor, posted its fifth straight quarterly loss earlier this week. And it has other problems which worsen the situation. Even if you box in the welterweight division you are not big enough. Motorola warned last week of a first-quarter loss and a worse-than-expected 2007 outlook.

Meanwhile rubber boot and ice-breaker maker (true) the Finnish founded Nokia, expanded its market share in mobile phones last year (rubber boots did not do so well), while Sony Ericsson overtook South Korea’s LG Electronics to grab fourth position.

To get the figures in perspective the smaller Japanese cellphone makers command less than 1% share of the global market and the direction is down.

So what could save them? Totally amazing breakthrough technology. Which comes down to pretty much eternal-life batteries or super-sharp, super-massive screens or super-transmission speeds or something else which I simply do not have the wit to imagine.

Many Chinese mobile phone makers, with less than 1% share globally, will have to exit the market or merge with rivals. Analysts estimate that in China at least 35 domestic brands exist. And the outlook for them is weak compared with Nokia and Motorola.

A handful of Chinese phone makers such as Lenovo, ZTE and Huawei, which supply reliable and feature-rich handsets at reasonable prices to operators in Europe, Latin America and Africa, will undoubtedly hack it, but their small scale — everything here is relative — will still limit their global reach.
Source: Reuters

Nokia, a Finnish company (which has originally a pulp mill and has made everything from wellington boots to ice breakers and some pretty iffy personal computers under the ICL brand) is the world’s top mobile phone maker and it has been making them since 1987. It reports sales in its China region grew 39% in 2006 from a year earlier to more than US$6.91 billion.

China has been Nokia’s single largest market since 2005 and the company won network expansion contracts from the provinces of Guangdong, Hunan and Sichuan last year.

Colin Giles, senior vice president of Nokia customer and market operations, China Area, said, ‘Nokia’s market share is now greater than 35% on the Chinese mainland.’

Which is not amazing and is pretty much in line with what everyone was expecting. What will be most interesting will be the coming two years when China will have its own vision transmission standard for mobile phones — 4G — and, of course, the ability to make and market it. Possibly under the Nokia brand. But, equally possibly, under Chinese brand names.
Source: English.eastday.com