China Mobile Phones Industry

An Expert's View about Sourcing in China

Posted on: 6 Apr 2010

Mobile phones continue to be a strong supply market in China. Although makers are revising their growth projections amid forecasts of slower export sales due to the financial slump, China’s mobile phone industry is still poised for steady, albeit moderate, growth as opposed to the worldwide market, which is expected to experience a downturn in overall shipments in 2009. Data from the Ministry of Industry and Information Technology shows that China produced 600 million mobile phones in 2008, equivalent to 50 percent of global supply. Nearly 400 million Chinamade mobile phones were shipped overseas in 2008.


Suppliers expect output and export volumes this year to remain steady or increase slightly. Any production expansion will be driven by anticipated growth in demand from emerging and less-developed regions. Export volume increases will also be spurred by makers’ efforts to explore new markets, including the Asia-Pacific region and the Middle East, to boost eroding margins.


Low-end handsets are forecast to experience the strongest growth, largely due to their price advantage. The impact of waning sales will be more noticeable in the midrange and high-end segments, where export quotes continue to rise to reflect value-added features.


The following are some of the keytrends we see in China’s mobile phone industry:

• Export prices will likely decrease in coming months as suppliers boost competitiveness to survive weaker overseas demand. Although some companies will be increasing quotes to offset higher manufacturing costs and losses incurred from the revaluation of the yuan, these will comprise aminority and will limit their increases to within 5 percent.

• GSM phones will continue to dominate production and exports even as makers also expand their lineup of dual-mode GSM/CDMA handsets.

• 3G phone supply will rise steadily. W-CDMA handsets will continue to lead production in 2009.

• The issuance of TD-SCDMA licenses this year is expected to boost production of handsets based on China’s homegrown 3G standard.

• The need for product differentiation will prompt makers to focus R&D on the integration of more features, in particular multimedia capability, and housing design innovations.

• GPS and mobile TV are two main trends that will likely be integrated into new releases.

• Suppliers will be improving operational efficiency and shortening design and development time to boost export capability. Makers will also be adopting more affordable solutions in line with efforts to reduce production costs.



The above is extracted from the Executive Summary of China Sourcing Report: Mobile Phones


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Posted: 06 April 2010

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