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Analysis and Forecast of China's Mobile Phone Market in 2007
2007-06-27 08:53  MOFCOM

Since 2007, China’s mobile phone industry has maintained a stable and healthy growth and seen a sharp increase in mobile phone exports.

Main characteristics of China’s mobile phone market during the first half of 2007:

1.Industrial scale continued to expand.

From January through June of 2007, the sales value and volume of China’s mobile phone totaled 161.08 bn Yuan and 266.8 mn units respectively, up by 29.6% and 33.4%over the same period last year.

2 Economic benefits maintained ahead.

Since the beginning of 2007, the economic benefits of China’s mobile phone industry maintained a stable development. From January through June, the sales profit ratio of China’s mobile phone industry was 3.22%. Foreign-funded enterprises has seen a bigger increase in sales profit ratio, which was 1.28 percentage points higher than that by the end of 2006.

3 Mobile phone exports saw a rapid growth.

During the first half of 2007, China’s mobile phone exports maintained a rapid growth. From January through May, China exported 130.98 mn units of mobile phone, which was up by 26.5% over the same period last year. Exports of Chinese-brand mobile phone reached 16.953 mn units, soared up by 49.6% over the corresponding period.

4. New types of mobile phones were developed at a faster pace.

Many mobile phone manufacturers have put more efforts into developing new types of mobile phones to meet the fierce competition of China’s mobile phone market. By the end of May this year, 900 new types of mobile phones were introduced to the domestic mobile phone market, which was doubled over the same period last year.

5 Domestic mobile phone market experienced remarkable growth.

From January through June of 2007, China’s mobile phone sales reached 102.9 mn units, up by 51% over the same period last year, which was 32.8 percentage points higher than the increase of China’s exported mobile phones. The prosperous development of China’s domestic mobile phone market was mainly attributed to the following reasons: firstly, Chinese farmers’ income continued to increase, which activated the mobile phone market in rural area; secondly, the rapid growth of low-end mobile phone stimulated the buying among low-income townspeople.

Problems occurred during the first half of 2007:

1. Market share of Chinese-brand mobile phone continued to decline.

By the end of May, the total sales of G-net mobile phone from 34 Chinese-brand mobile phone manufacturers reached 38.066 mn units, up by 10% over the same period last year, which accounted for 20.1% of China’s total mobile phone sales. From January through May, domestic sales of Chinese-brand mobile phone took up 33.8% of China’s domestic market share, down by 2 percentage points over 2006, which was mainly caused by the following reasons: firstly, most of Chinese mobile phone manufacturers do not have the core technologies, which makes it difficult to reduce the production cost. Secondly, the renovation of Chinese-brand mobile phone is relatively slow and brand image is not appealing enough to mobile phone consumers. Thirdly, Chinese-brand mobile phone manufacturers develop at a relatively slow pace, which restrains their sales growth; fourthly, quality of Chinese-brand mobile phone still needs to be elevated.

2. Competition in the mobile phone market is getting fiercer, which causes mobile phone price to drop at a faster speed.

From January through May, the average sales price of mobile phone was down by 4-7 percentage points over the same period last year while that of Chinese-brand mobile phone manufacturers dropped by 15-20 percentage points.

3. Illegal mobile phone market still exists, which requires the market regulation to be further enhanced.

Forecast of China’s mobile phone market in 2007:

In 2007, China’s mobile phone sales will maintain a stable growth. According to the IDC (Internet Data Center), the number of China’s new mobile phone user will total 60 mn. With increasing input into the construction of China’s rural area, the low-end mobile phone market will continue to develop; meanwhile, as the living standards of people from big and medium-sized cities are improved, they will renew their mobile phones at a faster speed.

It is estimated that in 2007, the output of China’s mobile phone would increase by 41% and total 500 mn units, out of which 400 mn units would be exported to other countries.



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