There are four factors that will ensure the development of China's mobile phone market this year.
Shanghai. March 6. INTERFAX-CHINA - In this week's Interfax TMT guest column, Wincely Lee, a well-known observer of China's TMT industry and writer for Chinese magazine Communications World Weekly, argues that there are four factors that will shore up China's handset industry against the current global slump. Translated from the original Chinese by Cindy Geng.
The fourth quarter 2008 financial results from mobile phone manufacturers show that the global handset market is facing its bleakest ever period. Nokia's sales revenue dropped by 5.4 percent quarter-on-quarter and 26.9 percent year-on-year. Its sales volume declined by 15 percent year-on-year. Motorola only sold 19.2 million mobile phones globally in the period, down 53 percent year-on-year, while it racked up a $3.6 billion net loss. Sony Ericsson sold 2.42 million units in the period, with a net loss of EUR 187 million ($233.64 million).
China's domestic mobile phone manufacturers such as Bird and Amoi are also suffering.
All in all, it seems there will be a recession in the global mobile phone market in 2009.
However, there are four factors that will ensure the development of China's mobile phone market this year.
First, 3G licenses will definitely boost the need for mobile terminals. China Mobile's TD-SCDMA network will cover 38 cities by June 2009 and will then expand to over 200 cities. China Mobile will hold large-scale TD-SCDMA handset tenders to promote the service this year.
China Unicom will release WCDMA numbers and launch WCDMA services in at least 55 cities on May 17 to ignite the WCDMA handset market.
China Telecom has also launched tenders for CDMA2000 1X EVDO terminals. CDMA2000 1X EVDO has the best performance of the three standards, with a 3.1-megabit per second (Mbps) download rate and 1.8 Mbps upload, making it very attractive to users.
Second, China Telecom is making an all-out effort to develop its 2G and 3G CDMA business. China Telecom is the only operator following the restructure that lacks experience in operating wireless services. As such, it will put all its strength into its CDMA business. China Telecom announced in September 2008 that it will purchase 55 million 2G and 3G CDMA handsets in 2009. This is a big accelerator for China's mobile phone market.
Third, personal handy-phone system (PHS) services are being abandoned and users will migrate to other networks. The Ministry of Industry and Information Technology (MIIT) announced on Feb. 3 that PHS services will end within three years, and has assured that the 70 million existing PHS users will be well catered for by telecom operators. Although some PHS users already own mobile phones, those who do not will be looking to buy handsets. No matter which operator these users go to, they will boost mobile phone sales in China.
Fourth, the government has included mobile phones in its project to supply subsidized household electronics to rural areas, which will offer handsets at a 13 percent discount. This will further stimulate the domestic handset industry, as the rural market has not yet been saturated.
The above is a personal opinion piece by the author. Its publication in no way implies that Interfax shares the views expressed in the article.
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