China to Give its Mobile Phone Makers a $120 Million Boost
By Elaine Chan at Bloomberg News
17 May 1999
China plans to give local mobile phone makers 1 billion yuan
($120 million) to help them make inroads in a market dominated
by foreign firms such as Ericsson AB of Sweden and Nokia
Oyje of Finland.
China's four mobile phone makers, including Eastern
Communications in the city of Hangzhou and China Kejian Co.
in Shenzhen, control only 10% of the market, even though
their phones sell for a third less than those made by foreign
rivals.
Jia Hua, an official at Xiamen Overseas Chinese Electronics
Co., the first Chinese firm to make mobile phones, confirmed
the government investment plans.
Foreign companies such as Nokia welcomed the competition,
saying it is securing its market in China by "investments in
local production and research and development," a
spokesman said.
At stake is a market whose subscribers are expected to surge
80% this year to 45 million. The new government investment in
local firms could boost their market share as high as 50 percent
within three years, the South China Morning Post reported.
Taking advantage of rising demand, Konka Group Co.,
Changhong Electrical Appliances Co., and TCL
Communications Equipment, China's biggest television
makers, recently announced plans to make mobile phones this
year.
Jia didn't say which local companies would receive
government support. The Post said Beijing will provide the
funds to 18 unidentified domestic companies.
Xiamen Overseas plans to boost sales of its "Xiahua" phones
to 200,000 units this year from about 50,000 units in 1998, Jia
said. The phones, which sell for about 1,800 yuan each, are
also exported to the Middle East and Eastern Europe.
Jia denied the investment plan was aimed at shutting out
competition. Instead, the government hopes "to develop the
domestic mobile phone making industry, which until now has
been a blank," he said.
Copyright 1999, Bloomberg L.P. All Rights Reserved. |
