Earlie, you have made a valid point in terms of the overcapacity of cell phone market. Here are some latest numbers from China:
In 2004, China produced 170 million cell phones. The domestic demand in China was only 70 million, and the rest were exported. The capacity in 2005 for sure will be higher than that in 2004, so the oversupply might be really bad if no new market is developed.
China produced about 1/3 of all the cell phones in the world, and consumed about 20% of the total, so both are positioned as number one in the world.
90% of those 170 million cell phones were assembled in China by using imported materials in 2004. So when the cell phone market collapses, China will not be the major one who suffers. The ones who suffer the most will be Nokia, Japanese, S. Korean companies...
In 2005, the major hope of the cell phone market will be the upgrade and the demand for fancy model in EU and N. America, the new users in Latin America (like Brazil and Mexico), Asia (like India), in Eastern Europe and ASEAN countries. And 3G market might also have some strong demand in late 2005.
For the last 2 decdes, especially the last 3 years since China has joined the WTO, Chinese leaders and businesses have been really short sighted, and contended themselves to be the so-called world factory and proud of being the cheap labor. They have spent little resources, energy and time in R&D, so now they stuck in the lowest food chain. Luckily, now some high ranking officials have realized this, so started to make some effort in developing their own technology and brand names. For sure, it will take some time to catch up. But it is a start.
>>Economically, card chip capability is not consequential compared with the "big two" (PCs and cell phones) markets.<<
True, but big number still counts, right?
>>How will China handle such a slow-down at this crucial stage of its economic expansion? I sure do not know, but I expect that it will be traumatic<<
>70% Of all the exports from China to the US are made by the US and/or other multinational companies located in China. So if the US slows down and lowers the demand for imports, China will suffer some (higher unemployment rate), but not traumatic. The ones who will suffer the most are those multi-national companies, and most of them are US companies themselves.
China only makes 0.5% - 5% of profit from all those assembling and low-end manufacturing. They would not affect China's GDP a whole lot.
Of those 100 million or so exported cell phones in 2004, 95% were made by foreign companies located in China, and only 4% were make by Chinese cell phone companies. So what if the exports cut by half? who will suffer the most? Not the Chinese companies.
Furthermore, China has, since the last two years, made some major effort to open the market in ASEAN, West Asia (MD), Latin America....
90% of HUAWEI’s US$2.28 billion plus international revenue in 2004 comes from customers in Africa, the Middle East, and Asia Pacific, not developed countries. And this is the trend big Chinese companies will follow.
Message 20931919
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