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Chinese firms take 10% of global 3G handset market

By Hao Zhou (chinadaily.com.cn)
Updated: 2008-05-21 17:59

Although Chinese handset makers are struggling in the second-generation mobile terminal market, they seem set to turn the tables in the battle for third-generation (3G) mobile terminal customers.

Competitive Chinese telecom manufacturers, such as ZTE, Huawei Technologies Co Ltd, and Amoi Electronics Co Ltd, have made their presence felt from North Africa to Asia-Pacific regions, and in some high-end markets like Europe and North America, earning almost a 10 percent stake in the world 3G wireless terminal market, according to a Third Generation Wireless White Paper issued by In-Stat, a leading telecom industry research institute.

The paper said Huawei and ZTE outperformed other Chinese cell phone makers last year, with output volumes of 22 million and 13 million 3G terminals respectively, almost nine percent of the global 3G terminal market.

Huawei's sales revenue hit $2.6 billion in 2007, with 70 percent from overseas markets, and it successfully broke into markets in the United States and Japan. Huawei delivered eight million memory chips last year, the highest in the world.

ZTE ranked the 6th in the world in terms of handset sales volume. Its sales revenue was $2.5 billion last year, 78 percent of which came from overseas. ZTE's 3G terminal products have made inroads into over 60 countries, and the company has established partnerships with many top 10 operators globally such as Telefonica De Espana, Telstra Corp and Hong Kong-listed Hutchison Whampoa.

Although Amoi is losing shares in the domestic market, its foreign 3G market grew faster than ever, based on its cooperation with Hutchison Whampoa, France Telecom and Vodafone. In-Stat's paper predicted that overseas orders would account for 40 percent of Amoi's shipment in 2008, and 75 percent of those exported would be 3G and intelligent mobile phones.

In-Stat believes that flexible customization strategies, immediate response to the markets, low cost and promising research capacity are key to Chinese 3G handset makers' success. Huawei and ZTE, for example, cut the research and development period on their customized models by almost four months compared with non-customized models, and they save 30 to 40 percent of marketing costs by customizing models directly for those telecom operators.

However, the paper also said Chinese 3G wireless manufacturers are still catering to mainly low-end niches by vying for orders from overseas telecom operators. Gaining position in the high-end markets, which are much more profitable, is still the challenge for these firms.