China Phone Handsets May Become Global
Brands-UBS Warburg
SHANGHAI -- China's cellular phone makers, most of whom are still in their
embryonic stage, could become world market players within the next 10 years,
UBS Warburg regional telecommunications director Andrew Loh said
Tuesday.
As the mobile phone technology moves to the so-called third generation, or
3G, platform, "this creates a huge opportunity for new entrants...to actually
take market share," Loh said in a news conference.
"We could see a Huawei and Zhongxin, in five to 10 years' time, become a
global household brand name, just like Ericsson and Motorola," he said.
At present, several domestic cellular phone makers have tied up with foreign
telecommunications firms to manufacture phones using 3G standards such as
Time Division-Synchronous Code Division Multiple Access, or TD-SCDMA,
wideband CDMA and CDMA 2000.
The technology transfer and cooperation will help local companies become
more adept in the new technology, in a similar manner to South Korean
telecommunications firms such as Samsung Electronics and LG Electronics
which achieved global brand success in the 1990s.
Nine domestic telecommunications manufacturers have been picked out by
the central government to lead the fast- growing cellular phone industry in
China.
Among the companies are TCL Communications Equipment Co. Ltd.
(Q.TCL), Konka Group Co. Ltd. (Q.KNK), Datang Telecom Technology Co.
Ltd. (Q.DTT), Shenzhen Zhongxing Telecom Co. Ltd. (Q.SZZ), Nanjing
Panda Electronics Co. Ltd. (Q.NPE), and Huawei Technologies Co.
(Q.HWI).
Most of their products are still lagging behind foreign brands in the domestic
market, which has been growing exponentially in the past few years. For
every one yuan ($1=CNY8.28) received from mobile phone sales in China,
only CNY0.10 to CNY0.15 is collected by domestic firms.
Based on UBS Warburg estimates, handset demand from new mobile phone
subscribers will reach about 40 million this year in China, with another six to
eight million subscribers replacing their old handsets throughout the year. As
of today, there are more than 85 million mobile phone subscribers in China.
Loh said local companies, in the short term, need to improve their economies
of scale and compete aggressively through lower pricing in order to carve out
a significant market share.
In the long run, overcapacity is likely to emerge, and "clearly, the trend is for
China to become an exporter of telecom equipment and handset," he added.
Loh, however, said it is too early to say which among the companies will
eventually stand out in the competition.
-By Ramoncito dela Cruz; Dow Jones Newswires; (86-21) 6218-3268;
ramoncito.delacruz@dowjones.com
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