In the 1840s an English writer famously observed that "If we could only persuade every person in China to lengthen his shirttail by a foot, we could keep the mills of Lancashire working round the clock." Shirts are a ubiquitous item for consumers, and the same phenomenon is occurring now in China's mobile handset market. The globe's mobile view point is to pursue the same 19th century dream of sales in China through 21st century means. The law of big numbers and gains from incremental shares has attracted international firms to enter the Chinese mobile market all along the value chain from handsets, through infrastructure and application providers. More than 71 million mobile phone handsets were sold in China in the first half of 2007, a 25% rise from 2006 sales. The mobile market may be cooling but is hardly in "S" curve phase with volume sales growth decelerating as compared to same periods in 2005 and 2006.
First half year earnings for China Mobile indicate US$5 billion in revenues, a 25.7% rise year on year from '06, off a commensurate 21.6% in revenues. Simple reasons include a) continued growth of China's economy, (b) increasing mobile penetration (see a),(c) expansion of mobile value added services, (d) increase in basic voice usage.
Has China's mobile market evolved to a more developed market pattern? Perhaps. China's mobile handset market is increasingly concentrated in the hands of a few key manufacturers--all foreign. Nokia, Motorola and Samsung accounted for 61.4% of the overall mobile phone market in the first half of 2007, up almost 9% year-on-year, according to figures from CCID Consulting. Nokia and Motorola both saw a notable rise in their market shares -- their combined share rose almost 10% -- and some argue the driver of this is both companies launching major initiatives in the low-end mobile phone market in the first half of 2007. Lenovo, the only Chinese company in the top five trails in fourth place, with a 5.7% share, slightly ahead of Sony Ericsson's 4.9% share.
Nokia and Motorola accounted for 57% of the market of mobile phones priced between 500 yuan (appx. US$66) and 700 yuan (appx. US$92). Their share of the mobile phone market priced under 500 yuan reached a high of 70%.
According to the report, there is some weakness on the revenue side. While volume sales growth is still healthy, revenue growth is less robust because of reducing handset prices. Revenues rose just 5.5% year-on-year to 85bn (appx. US$ 12 billion) yuan in the first half of 2007.
Notwithstanding the large market share of the Foreign Foes, China's mobile handset manufacturers such as Bird, will continue to make quality gains and improve on innovation. It's just a matter of time that they start looking to enter off shore markets.
If a western mobile company is not there now, they should be making plans to get there soon...I can help. I've got good guanxi.
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