THURSDAY, JANUARY 9, 2003
Motorola hopes to retain lead in Chinese market
REUTERS
SHANGHAI: Wireless giant Motorola hopes to maintain its roughly 30 per cent share of China's handset market, the world's largest, in 2003 despite formidable domestic competition, a senior executive said on Thursday.
The world's number two handset maker aims to cling onto its hard-won leadership in an increasingly saturated market populated by 457 phone models and beset by sliding prices and moderating growth, said Tom Masci, Motorola's Asia-Pacific handset chief.
"China is plateauing," Masci told reporters in Shanghai. "The competition is pretty ferocious there right now."
"What's happening is that there are more entrants and they are becoming more lower-priced entrants," he said.
"Realistically, if we can hold onto our share, we'd be doing a phenomenal job this year. And I think we can."
To mitigate the impact of falling prices in its second largest market, the Illinois-based company will try to get existing users to switch to phones with more features, Masci said.
Underscoring the importance of the China market, Motorola launched a new line of mobile phones boasting integrated cameras, colour screens and multimedia messaging in Shanghai on Wednesday, in a raucous blast of rock music and elaborate exhibitions.
"All those things are going to tend to take the replacement market and encourage a lot of people who've been waiting for these things to trade out," Masci said.
The company hopes its futuristic new phones will boost spending on mobile handsets that could offset shrinking margins.
Jumping on the bandwagon
Still, China's break-neck telecoms growth is showing signs of slowing, while prices are expected to fall with new players -- both foreign and domestic -- jumping into the fray, hitting profits, analysts said.
In a trend set to extend into 2003, average selling prices dipped to bewtween 1,700 and 1,800 yuan in 2002 from 2,300 to 2,400 yuan in 2001, Masci said.
Production expansions are compounding the problem. UBS Warburg said in a January report latecomers into China such as LG Electronics and Japan's Kyocera were planning significant capacity increases.
And Chinese rivals like TCL are ramping up output to offset lower margins, the report said.
But China is still one of the world's fastest-growing major markets. Penetration remains low, with just 15 per cent of China's 1.3 billion people owning a mobile phone.
Timothy Chen, Motorola's China chief, said that up to 70 million handsets would be shipped in the country this year, up more than 10 per cent from 2002.
Motorola, which climbed to the top of the China pile in 2002, is thus keeping a close eye on its rivals, particularly Samsung Electronics.
The up-and-coming South Korean mobile firm leapfrogged into the world number three spot in 2002, arousing speculation it could eventually overtake Motorola.
"They're one of the real threats in the region because they've come out with real compelling design and they're a force in CDMA as well," said Masci, referring to the burgeoning Code Division Multiple Access standard now gaining users in China.
To counter Samsung, Motorola is using a research base in Seoul as a development centre for mobile phones worldwide.
"There's no mistake that we've got our design centre in Korea. We think what's happened is the force of handset design ... is now really changed over to Korea," Masci said.
Copyright 2003 Times Internet Limited. All rights reserved.