INTERVIEW-Motorola Eyes 20 Pct of China Cellphone Market
Thu Nov 17, 2005
By Doug Young
HONG KONG (Reuters) - Motorola Inc. (MOT.N: Quote, Profile, Research), the world's No. 2 cellphone maker, said on Thursday it wants to boost its share of China's mobile phone market to 20 percent, following a year-long build-up of its national sales network.
Motorola now controlled about 15 percent of the China market by unit sales, compared with about 22 percent for market leader Nokia Oyj (NOK1V.HE: Quote, Profile, Research), said Michael Tatelman, general manager for the company's North Asia mobile devices division.
"We ought to have an opportunity to capture better than 20 percent of the market," he said in an interview on the sidelines of the 3G World Congress in Hong Kong. "We want to be more than 20 percent as soon as possible."
His bullish view comes on the heels of a year-long build-up of Motorola's China sales network as the company extends its reach into mid-tier and smaller cities that were once strongholds for home-grown players like Ningbo Bird Co. Ltd. (600130.SS: Quote, Profile, Research) and TCL Communication Technology Holdings Ltd. (2618.HK: Quote, Profile, Research).
Tatelman said Motorola's China sales network would extend to about 30,000 retail outlets by the end of this year, giving it access to stores that account for 80 percent of all cellphone sales in the country.
"We've now tripled our network in the last year," he said. "This gives us a platform as we launch all our new products. ... It gives us a much more prolific footprint to capture more share."
China is the world's biggest mobile market, with 378 million subscribers at the end of September and about 100 million handsets sold each year. But it has also become one of the world's most competitive markets.
Motorola and Nokia, along with other global players like Samsung Electronics (005930.KS: Quote, Profile, Research) and a joint venture between Sony Corp (6758.T: Quote, Profile, Research) and Ericsson (ERICb.ST: Quote, Profile, Research), dominated the market in the early part of the decade.
But they lost steady share to upstarts like Bird and TCL, which moved in at the lower end of the market to chase the estimated 30 percent of consumers who buy models for under 1,000 yuan ($125), in a nation where most people still earn less than $100 a month.
At the height of their drive, the domestic companies controlled about half of the total domestic market by unit sales.
The global players, realising the potential of lower-end buyers, have fought back over the last year, taking share from the domestics who have seen their cut of the market drop back down to about 40 percent as many slipped into the red.
Tatelman said the market was currently over-saturated with both cellphone producers and models, estimating the former at about 100 and the latter at 1,000 new models per year.
He added that Motorola, which derives about 13 percent of its total revenue for all products from China, remained profitable in the local handset market, but declined to elaborate.
"There needs to be a bit of consolidation in the market," he said. "There're too many models."
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