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Nokia builds China network, launches HK flagship http://today.reuters.com/news/newsArticle.aspx?type=reutersEdge&storyID=2006-07-17T055222Z_01_SHA262795_RTRUKOC_0_US-TELECOMS-CHINA-NOKIA.xml
Mon Jul 17, 2006
By Doug Young
SHANGHAI (Reuters) - Nokia (NOK1V.HE: Quote, Profile, Research), the world's top cellphone maker, has boosted its Chinese retail network by 20 percent in the past six months as it takes market share from domestic rivals and races to stay ahead of Motorola Inc. (MOT.N: Quote, Profile, Research). The two companies are rapidly building national distribution networks and account for more than half of the fast-growing Chinese market, with Nokia at about a third and Motorola at more than 20 percent, according to the latest industry data.
Nokia, China's largest handset seller, has built its retail network there to 48,000 stores from 40,000 a half-year ago, Colin Giles, senior vice president of customer and market operations for Greater China, said on Monday.
Nokia works directly with 45,000 of the outlets, Giles told Reuters in a phone interview from Hong Kong, where the company was opening its first Asian flagship store, part of a plan to launch 18 such stores globally.
"If you went back a couple of years, we probably would've been working with half of that," Giles said. "If you went back four years ago, our direct relationship with the retailers would've been zero other than putting merchandise into their stores."
Giles said Nokia plans to open a flagship store in China within the next year in a direct challenge to Motorola, the world's second biggest cellphone maker, which opened a flagship store in Shanghai last week, its first in China.
Both companies have made strong gains recently -- a 10 percentage point gain in market share for Nokia last year alone -- largely at the expense of homegrown Chinese rivals like Ningbo Bird (600130.SS: Quote, Profile, Research) and TCL Communication (2618.HK: Quote, Profile, Research). The domestic players made big inroads into their home market earlier in the decade but have given up most of those gains over the last two years amid aggressive campaigns by Nokia and Motorola to build strong national distribution networks.
China is the world's biggest mobile phone market, with more than 400 million subscribers and nearly 100 million handsets sold each year. But with much of the new growth coming in smaller, more price-sensitive areas, Nokia and Motorola have been building up their networks to reach those places, developing a wider range of models catering to lower-spending consumers.
At its Shanghai flagship store opening last week, Motorola said its Chinese store network now extended to about 30,000 outlets, triple the number it had just 18 months ago.
The battle of the flagship stores, and the development of strong retail networks in general, represent efforts by Motorola and Nokia to reach out more directly to consumers to sell their products.
In a jab at Motorola, Nokia said last month it would open its first global flagship store in Chicago, Motorola's backyard. The Finnish company has also announced a flagship store in Moscow.
"In Asia Pacific there will also be other flagship stores," Giles said, declining to provide details.
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