nokia-man.jpgLatest figures from CCID show that foreign firms are strengthening their dominant position in China's mobile phone market.

In the first half of 2007, Nokia, Motorola and Samsung accounted for a total market share of 61.4%, an increase of 8.9% compared with the same period of last year, the research firm found.

Domestic manufacturers churned out more than 71.5m handsets in the first half of the year, a rise of 25% on the year-earlier first-half. However, revenues rose just 5.5% over the same period. The contrast perfectly illustrates the challenges facing handset manufacturers in China, namely a rapidly developing market, intense competition and tumbling average selling prices.

Domestic manufacturers seem to be losing traction in the low-end market, which was traditionally their stronghold. According to CCID, Nokia and Motorola took 57% of the mid-range market — handsets priced from 500 to 700 yuan — but took 70% of the low-end segment, meaning phones costing less than 500 yuan.

CCID says that domestic manufacturers that want to challenge the foreign competition need to concentrate on brand marketing and brand promotion, areas where they have traditionally given little attention.

More data, this time from iSuppli, which predicts domestically-designed handset shipments will reach 204m units in 2007. This 58% growth over 2006 is driven by increased shipments from Chinese handset original equipment manufacturers (OEMs), independent design houses (IDHs) and original design manufacturers (ODMs). Export shipments of domestically-designed handsets are forecast to be 79m this year.

Meanwhile, China's mobile phone users exceeded 515m at the end of August, a monthly rise of 6.8m, according to official statistics from the Ministry of Information Industry (MII).

In stark contrast to the booming mobile market, the number of fixed-line subscribers remained almost the same as last month's 372m and the number of new fixed-line users averaged 579,000 per month, less than a tenth of that of mobile users.

Since last year, China's rural areas have seen a strong demand for cell phones, which has helped boost handset output, the MII said.

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