According to statistics of the ITIS project -a project initiated by Taiwan's Ministry of Economic Affairs and conducted by Taipei-based MIC -China's mobile phone industry reached a shipment volume of 165.0 million units in the second quarter of 2008, representing 6.4% sequential growth and 9.5% year-on-year growth. Shipment volume of GSM (Global System for Mobile communications) products reached 143.1 million units and accounted for 86.8% of total shipment, down 2.1 percentage points. The shipment volume of CDMA (Code Division Multiple Access) phones increased to 20.5 million units, with their share of overall shipment adding 2.4 percentage points, reaching 12.4%. This was mainly due to strong sales performances of ZTE and Huawei in overseas markets and the fact that some Taiwanese makers obtained CDMA orders from Nokia. Shipment volume of PAS (Personal Access System) products continued to fall, reaching only 1.3 million units in the second quarter. Their share of total shipment is below 1%.
Reasons for the somewhat weak shipment in the second quarter were the fact that this period is the off-season in the North American and European markets, and the weak performance of China's domestic mobile phone market. The holiday period around May 1 used to be a major consumption peak in China, but starting in 2008 the extended holiday period around this date was shortened. The uncertain outlook of the global and Chinese economies also caused sales in this period to be below past levels. Furthermore, the province of Sichuan suffered a major earthquake in May. With many Chinese citizens giving money to the relief efforts, their focus on other expenditures declined. These factors all had an impact on sales in China's domestic market.
In the second quarter of 2008, international vendors accounted for 55.1% of the total Chinese industry's total shipment. Taiwanese makers accounted for 13.9%, and Chinese makers for 31.0%.
The Chinese makers with the most stable performances in the first half of 2008 were export-oriented companies such as Huawei, TCL, ZTE, and Konka. As mobile phone subscribers in India, the Middle East, Africa and Southeast Asia are continually increasing, these regions feature more mobile phone demand than other markets. Demand for mid-range and high-end models is especially high. Also, Huawei and ZTE have established a strong foundation in cooperation with telecom operators with their network equipment. Combined with competitive terminal product prices, they receive a steady stream of orders for mobile phones. TCL can maintain its competitiveness by relying on the name-recognition of the Alcatel brand. As a result of these factors, ZTE, Huawei and TCL all saw significant year-on-year shipment growth in the second quarter of 2008.
Export products can relieve some of the pressure created by the fierce price competition in the Chinese domestic market, and at same time provide high profit margins. Many makers are thus continuing to focus on development in this area. For example, Lenovo and Tianyu, which originally focused on the domestic market, are increasing their investments in their export businesses.
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About MIC
Market Intelligence Center, based in Taipei, Taiwan, was founded in 1987. MIC is Taiwan's premier IT industry research and consulting firm providing intelligence, in-depth analysis, and strategic consulting services on global IT product and technology trends, focusing on markets and industries in Asia-Pacific. MIC is part of the Institute for Information Industry. https://mic.iii.org.tw/english
About ITIS
The ITIS (Industry and Technology Intelligence Services) project is managed by the Department of Industrial Technology of Taiwan's Ministry of Economic Affairs. As part of the project, research is conducted in a variety of fields, including the ICT sector. The project serves both the public and private sector.