The New Nokia China: An Overview
Compiled from a variety of sources.
Nokia China Reorganization
Nokia recently announced it will merge four existing ventures in China into a single joint venture. The merged joint venture will be converted into a foreign-invested company limited by shares (CLS) subject to approval from relevant government authorities.
The shareholders of the CLS will be Nokia, Beijing Capitel Company, (Capitel), Dongguan Nan Xin Industrial Development Company, (Nan Xin), Shanghai Alliance Investment Ltd. (SAIL), and Beijing Hangxing Machinery Manufacturing Corporation (Hangxing). The move is to strengthen the operational efficiency and competitiveness of its China operations.
The new company will be headquartered in Beijing with branch offices in Dongguan and Suzhou, and will continue operations in each of the previous joint venture locations.
Pending government approval, the new company will begin production of CDMA handsets, using Nokia designed 1xRTT chipsets. Nokia, is in the process of overhauling its handset distribution system in China in an effort to improve its sales in rural areas, where analysts say local suppliers have had an advantage.
The new company represents one of the largest foreign invested enterprises, as well as the largest manufacturer and exporter in the mobile telecommunications industry in China.
Nokia (China) Reorganized
Nokia China [major shareholder with over 60% ownership]
Capitel Beijing Capitel Co., Ltd.
Nan Xin Dongguan Nan Xin Industrial Development Co., Ltd.
SAIL Shanghai Alliance Investment Ltd.
Hangxing Beijing Hangxing Machinery Manufacturing Corporation
• (Capitel) Beijing Capitel Nokia Mobile Telecommunications Co., Ltd., China
- Established 1995
- Production of GSM digital cellular systems and mobile phones
- Partner Beijing Capitel Co., Ltd.
• (Nan Xin) Dongguan Nokia Mobile Telecommunications Co., Ltd., China
- Established 1995
- Production of mobile phones and accessories
- Partner Dongguan Nan Xin Industrial Development Co., Ltd.
• (SAIL) Nokia (Suzhou) Telecommunications Co., Ltd., China
- Established in 1998 as soly-owned foreign company
- Established as a Joint Venture in 2001
- Production of GSM base station and cellular transmission product
- Partner Shanghai Alliance Investment Ltd.
• (Nan Xin) Beijing Nokia Hangxing Telecommunications Systems Co., Ltd., China
- Established 1995
- Production of mobile & fixed digital switches, and base station controllers
- Partner Beijing Hangxing Machinery Manufacturing Corporation
Other Nokia (China) Endeavors
These established Nokia ventures, partnerships, service companies and R&D endeavors in China appear not to be involved in the merger of Nokia manufacturing operations, at least not initially.
• Hangzhou R&D center, China
- Established 2001
--> MoU between Nokia Networks and the Zhejiang Provincial Government of China
--> Start of operations at the beginning of 2002
--> To start cooperation with a local partner in 2003
- Software and platform technology development for Nokia's 3G networks
• Nokia Citic Digital Technology Co. (Beijing) Ltd., China
- Established 1999
- Development, manufacturing and marketing of digital multimedia terminals
- Partners: CITIC Technology Co. Ltd and the Academy of Broadcasting Science
• Nokia Neu Comm Tech Company Ltd., China
- Established 2000
- Software products research and development
- Partner: NEU-ALPINE Software Holding Co. Ltd
• ChongQing Nokia Telecommunications Co. Ltd, China
- Established 1998
- Provision of services, manufacture and supply products for fixed networks
- Partners: ChongQing Telecommunications Bureau, ChongQing PTAC
• Fujian Nokia Mobile Telecommunications Ltd., China
- Established 1997
- GSM 900/1800 technical services, primarily network planning and optimization
- Partner: Fujian PTA
• COMMIT, China
- Established 2002
- Made up of 17 companies (9 Chinese, 8 foreign)
- Initial funding US$28 million
- Design company focused on the development of multimedia handsets for 3G mobile networks.
- Commit will offer a range of engineering capabilities: developing reference designs for handsets based on TD-SCDMA and W-CDMA; application software development; IC design.
- Indirect financial backing provided by 3 of Taiwan's largest handset makers, which have invested in Commit through intermediary companies.
- Partners (16): Texas Instruments, LG Electronics, China Putian Information Industry Corp., China Academy of Telecommunications Technology (CATT), Hyper Market International Ltd., and 11 others.
More on the Commit JV:
nokia.com.cn
wireless.itworld.com
commsdesign.com
Key Chinese Alliances and Joint Ventures:
.
Eastcom Motorola
CapiTel Nokia
Shanghai Bell Samsung
Shanghai Bell Alcatel SA
TCL Ericsson
Bird Sagem
Eastcom Motorola
Legend Amoisonic
Langchao Group (EII) LGE
Wuhan NEC
.
China Domestic (No Exports] 2002 Handset Market Share by Vendor:
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1. Motorola 21.6%
2. Nokia 16.7%
3. Bird 9.6%
4. TCL 8.7%
5. Keijan 6.5%
6. Eastcom 5.9%
7. Siemens 4.3%
8. Konka 3.0%
9. Amoisonic 2.9%
10. Alcatel 2.1%
-- Other Foreign 16.2% Sony Ericsson, Panasonic, LGE
-- other Chinese 2.5% Haier, CapiTel, HiSense
.
Sources: MII, ChinaNex, March 2003
.
China 2002 Handset Production and Sales (million units)
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Rank Company China production China sales
1 Motorola 37.499 18.724
2 Nokia 32.287 11.347
3 Ningbo Bird 7.492 6.786
4 TCL ? 6.706
These statistics were compiled by China’s Ministry of Information Industry (MII) and reported in February in DigiTimes. According to MII, 132 million mobile phones were produced last year in China either for internal use or export. The vast majority were GSM, not CDMA, and Chinese manufacturers produced 40% of the domestic supply. Ningbo Bird, replaced TCL Mobile Communication as the number 3 handset vendor in China, trailing after Motorola and Nokia, and Chinese Electronics Corporation (CEC) is moving up the ladder rapidly.
The number of handset companies has grown from five in 1997 to 37 in 2002, in which 29 make GSM handsets, 20 for CDMA (including 14 for both GSM and CDMA handsets). Total production capacity reached 200 million sets a year in 2002. TCL and Bird are the largest Chinese handset companies, each making more than 5 million handsets a year, the following seven companies also have production exceeding 1 million a year, Kejian, Haier, Amoisonic, Konka, CapiTel, Soutec and Eastcom. Their production and sales accounted for over 95% of all Chinese companies, and 21.6% and 20.9% of Chinese and foreign companies.
The following statistics are from ChinaNex:
China 2002 Handset Production by Technology
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Production 2002 % Exports Companies
Million Units Increase Million Producing
.
GSM: 116.2 mm 43.8% 52.4 mm 30 handset companies
CDMA: 6.9 mm -- 2.7 mm 18 handset companies
.
15 companies manufacture GSM only
.
14 companies manufacture GSM and CDMA
.
06 companies manufacture CDMA only
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China Handset Production v. New Cellphone Users
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1999 2000 2001 2002
New Cellphone Users: 17.96M 41.97M 59.54M 61.39M
Handset Production: 22.68M 83.51M 106.22M 131.55M
The China Handset Oversupply Issue
.
Current production capacity in China is estimated at 250 to 300 million units per year.
- TCL and Bird claim they can make 15 million a year
- CEC Telecom, Kejian and Haier target is 10 million a year.
ChinaNex recently pointed out that"many industry analysts agree companies making less than 10 million units a year will not survive in this market. As everybody tries to increase production, how the [Chinese] market will digest it is becoming a serious concern."
The Chinese handset market has become a magnet for foreign investment, nearly $10 billion have been poured in during 2000-2003, in which $4 billion in 2002 alone. All major handset companies, including Motorola, Ericsson, Nokia, Samsung, LG and Sanyo, have set up joint ventures and expanded operations.
As a result of a production surge, handset prices in China have fallen considerably, which contributes to lower operating cost for operators and advantage of domestic brands. Between 1998 and 2002, handsets export jumped 225 times, most from foreign JVs. The Chinese manufacturers are attempting to boost their export sales, but have traditionally been weak in this arena.
.
ChinaNex on Nokia China
(excerpted from ChinaNex's 04/2003 update)
Nokia China
11 Hepingli Dongjie
Dongcheng District, Beijing 100013
China
Nokia of Finland opened its first office in Beijing in 1985. In 1986 it sold the first NMT450 analog cellphone system in China and the beginning a long lasting success. At present, China is Nokia's second largest market (after the US) with 3.4 billion Euros ($2.9 billion) in sales in 2001 and 2.5 billion Euros ($2.2 billion) in exports, up 47% from a year ago.
Nokia began to sell GSM in China in 1994. By the end of 2001, Nokia invested a total of 2.3 billion Euro (nearly $2 billion) in China and established itself as a leading supplier in the handset market. The company has 22 local offices, five joint ventures and two research centers, with nearly 5,000 employees. Nokia is the second largest handset supplier in China after Motorola, with about 17% in market share (2002).
Nokia's has developed an extensive reseller network with 900 outlets throughout China.
In December 2001, Nokia opened a "Xing Wang (StarNet) International Industrial Park" with a Chinese partner, the 10 billion yuan ($1.2 billion) park will be used to manufacture Nokia handsets and other products by Nokia's part suppliers and other companies in the world.
In March 2003 , Nokia made a strategic turn by announcing it will begin production of CDMA handsets in China and form a new joint venture for handset production (including CDMA) which will replace four handset joint ventures (two in Beijing, one in Guangdong, one in Jiangsu). The new JV will be the largest handset manufacturer with combined production and exports.
Nokia on Nokia China
(excerpted from Nokia's website)
- Sales company established 1985
- Personnel approx. 5,200
- Production: Beijing, Dongguan (mobile phones); Beijing, ChongQing, Fujian, Suzhou (telecommunications network infrastructure); Beijing (digital home communications products)
Nokia Worldwide In 2002
Nokia translated strong brand, product offering, industry-leading execution and operational efficiency into highly profitable results.
- Nokia's net sales totaled EUR 30.0 billion (USD 30.8 billion)
- Pro forma operating profit totaled EUR 5.4 billion
- Pro forma operating margin increased to 18.1%
- Pro forma earnings per share (diluted) increased to EUR 0.82
- At 2002 end, Nokia had 17 production facilities in 9 countries
- At 2002 end, Nokia had R&D centers in 14 countries
- At 2002 end, Nokia employed nearly 52,000 people
Nokia comprises two business groups:
- Nokia Mobile Phones
- Nokia Networks
Nokia also includes:
- Nokia Ventures Organization
- Nokia Research Center (Nokia corporate research unit)
Nokia is:
- The largest and most profitable manufacturer of Communications equipment in the world
- The 4th most profitable IT company in the world trailing only Microsoft, Samsung, and IBM
- The 6th most recognized and valuable brand in the world
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- Eric - |
