China's Haier sees no demand for CDMA handsets
By Reuters staff
12 March 2002
A top executive at Chinese white goods giant Haier Group said on Tuesday its
mobile phone unit was waiting for purchase orders before continuing to make
phones using the Code Division Multiple Access (CDMA) standard.
"Without orders, we won't make them," Haier president Yang Mianmian told
reporters. Haier began making phones using San Diego-based Qualcomm Inc's
CDMA standard in addition to the phones it makes using the GSM (Global System
for Mobile Communications) standard, which dominates in China, as well as Asia
and Europe.
Yang's statement was one of the most ominous signs yet of weak interest in the
CDMA service the country's number two cellular operator China Unicom launched
this year.
Hong Kong and New York-listed China Unicom Ltd has agreed to lease the
networks from its parent China Unicom Group, which spent $2.9 billion on the
national network last year, in the mostly-affluent provinces where it operates.
But Yang said Chinese who can afford a mobile phone already had GSM phones
and were unlikely to buy CDMA phones before it becomes common in China for
people to have two cellphones.
"Consumers haven't gotten to this level, so there really aren't that many people
buying CDMA numbers," she said.
China Unicom Group said last week it would buy 500,000 handsets from Chinese
producers in a bid to calm their fears and to jumpstart the market.
Last week, Merrill Lynch slashed its 2002 forecast for Unicom CDMA subscribers
to three million from its earlier estimate of 5.3 million.
Yang said China Unicom Ltd could stimulate demand by providing phones to
subscribers, or "subsidising" cellphone use in the American and European styles.
In response to a question about Shanghai Daily newspaper report on Monday that
regulators had ordered some of the licensed CDMA handset vendors in China to
produce 700,000 phones by early May, Yang said this would not affect Haier's
plans. "A ministry cannot order production. How can a ministry order production?"
she said.
Haier, capable of making five million units per year, had only made "a several
hundred" phones so far, Yang said.
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