Figure 1 Mobile Phone User Growth in China Figure 2 The Size of the Communications Equipment Market As A Whole and of the MobileHandset Market in China Figure 3 Changes in Mobile Phone Handset Sales in China and inthe Percentage of the Mobile Communications Equipment Market Accounted for by Handset Sales Figure 4 Percentage of Total Handset Production Volume in China in 2000 Accounted for By Each Manufacturer
Table 1 Local Handset Manufacturers in China
Given the present state of competition, China's local handset manufacturers are still restricted to gradually increasing their market share in the low-end handset market; at the same time, they are finding it difficult to make a profit. While local manufacturers have formulated a strategy for "outflanking" the foreign manufacturers by introducing low-priced high-end handsets to force the foreign companies to cut prices, so that the local manufacturers can then attack the low-end market in earnest, it remains to be seen whether this strategy will actually work. While foreign manufacturers' strategy of producing handsets for the China market locally and of using China manufacturers for OEM production has significantly reduced local manufacturers' advantage in terms of production costs, it has also weakened the mystique which the foreign brands previously possessed, and will reduce the attraction which China consumers feel towards these brands. Having OEM production performed in China is also bound to enhance the local manufacturers capabilities in terms of production, R&D and management, thereby improving the quality of locally-made handsets and making them more competitive. It can be anticipated that competition in the China handset market will gradually become fiercer, and that a price war cannot be far off.