3gsmqueue.jpgEngagingChina
spent last week in Barcelona at the 3GSM trade show, which attracted a
massive 55,000 people from the mobile phone industry, including a
sizable and very visible contingent from China.

Particularly visible in my hotel at least, as Huawei, the
up-and-coming Chinese equipment vendor, seemed to have block-booked the
hotel for its staff. While ZTE sponsored the yellow bags that were
given out free to all and sundry.

China's growing weight in the telecoms manufacturing business is
something we have commented on many times. But a visitor to 3GSM who
had skipped the past few editions would nevertheless be surprised at
just what a force China has become. For example, China produced 450m
phones in 2006, 350m of them went for export.

The clearest sign of China's new-found desire to be taken seriously
in this industry could be seen in size and location of their stands. In
the past, Chinese manufacturers at western trade shows would typically
rent small stands in out-of-the-way hall locations. But at 3GSM, the
stands of ZTE and Huawei were as big if not bigger as those of their better-known competitors.

Indeed, Huawei had a prime location between the stands of Japanese
rivals NEC and Sharp, thus providing an uncomfortable and very visible
reminder to the Japanese that China is out to steel their business.

Indeed, ZTE scored a minor coup by announcing at the show that it had won a global contract
to supply Vodafone with an ultra low-cost handset that will bear the
Vodafone brand. The phone is aimed squarely at the emerging markets and
this was one of the big themes at 3GSM: cost-effective strategies for
handset manufacturers and operators to tap into the enormous potential
of the emerging markets.

kw208.jpgIn similar cost-cutting vein, FG Wireless,
a Shanghai-based firm that had a stand in the China Pavilion, was
showing at 3GSM what it claimed was the world's first 3G phone costing
less than $100, the KW208 (shown right) .

Because it is a little-known design house and doesn't manufacture
phones, FG Wireless' claim was rather overshadowed by the unveiling of
a similar sub-$100 3G phone from the much better-known LG of South
Korea. Its phone was selected by the GSM Association as its candidate
for the “3G for all” campaign, which is aimed at speeding the update of
3G services.

That perhaps illustrates the big challenge facing much of China's
handset manufacturing industry: its largely invisible. While the
technology is good and the prices rock-bottom, China's phone industry
consists mostly of small little-known companies that have traditionally
been content to design and manufacture phones for better-known western
and Asian OEMs.

We all know that most of the world's phones are already made in
China, but can Chinese manufacturers learn how to brand and market
phones as well as western giants like Motorola or Nokia?


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