Mobile phone after-sales service a new profit center
By Li Weitao (China Daily)Updated: 2007-06-27 09:52
The mobile phone after-sales service sector has become an emerging lucrative market in China and is set to boom in the coming years, a research firm said yesterday.
Beijing-based CCID Consulting said the handset after-sales service sector generated 3.19 billion yuan in revenue last year, up 16.8 percent year-on-year, an indication that it's becoming a profit center for manufacturers.
That marks a major departure from the traditional perception that after-sales service, as part of manufacturers' customer service offerings, is an internal non-profit segment, according to Jiang Lifeng, an analyst with CCID Consulting.
The researcher forecast handset after-sales services revenue would see
compound annual growth of 19.8 percent between 2007-09 and hit 5.48 billion yuan
by 2009. 
The tough competition in China's handset market has boosted consumer demands for after-sales services.
Unlike most markets elsewhere in the world, China's handset sector is overcrowded, with about 80 manufacturers bombarding consumers with new models each month.
According to the Ministry of Information Industry (MII), 900 new models were launched in the domestic market in the first five months of this year.
A shortened product development cycle has resulted in a rise of consumer complaints against quality. A survey by CCID Consulting found 69 percent of consumers have had their phones fixed.
Currently there are more than 70,000 handset maintenance and service outlets in China, but most are small, local and uncompetitive.
CCID Consulting said the increasing profitability of after-sales services would lead to an industry consolidation or the creation of some large national independent service providers.
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In 2006, 18.2 percent, or 600 million yuan, of the handset after-sales service revenue was generated from value-added services, compared with 2.5 percent two years ago, according to CCID.
Some manufacturers might seek to outsource a part of their after-sales services to third-party companies, the consultancy said.
"We would not outsource our after-sales services, but we are ready to serve users of other brands, apart from our own customers," said Shi Yuanzheng, head of domestic maker Haier's customer services.
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