The name is absent

Encouraged by government’s support and lured by the rapidly growing handset market in
China, many domestic firms entered this market after 1999. There are over twenty domestic
GSM or CDMA handset manufacturers now, which grew out of existing manufacturers in the
four categories as listed in Table 3: consumer electronics producers, specialized mobile phone
producers, telecommunications equipment manufacturers, and PC manufactures. Mastering
manufacturing skills and occupying the domestic market was a first priority for these domestic
producers. In fact, most domestic firms chose a “brand-pasting” (Tie Pai) strategy, that is, they
imported mobile phones directly from South Korea or Taiwan and then pasted their own brands
on the phones. In this sense, most of the first generation handsets of these firms are not “real”
domestic brand products since they were not designed and manufactured domestically. But at
the same time, they invested heavily in manufacturing facilities and process technologies to
achieve economies of scale and learning curve effects. Later, most of these firms chose joint
cooperation with foreign companies (not joint ventures) or developed R&D independently.
Some of the domestic manufacturers are still using the “brand-pasting” method for at least a
portion of their products and enjoy the benefits of the government’s preferential policies. For
example, as late as in 2003, a senior official of Ministry of Information Industry (MII)
condemned publicly the “brand-pasting” strategy and threatened to ban the import of mobile
phones completely in 2004 (Wang, 2004). Some analysts are skeptical about the technical
competency of China’s domestic firms (Ministry of Commerce, 2003), but clearly the capacity
gap is closing.

China’s local producers gradually dominated the domestic mobile phone market. Figure
3 shows that the domestic market share of Chinese local manufacturers increased gradually from
5.46% in 1999 to 10.7% in 2000, and 21.8% in 2001. In 2002 the market share increased sharply

China's Mobile Handsets FINAL DRAFT 2006.sph ERSA2006 Greece

<<   10   11   12   13   14   15   16   >>

More intriguing information