The name is absent

sales of CDMA handsets produced by joint venture firms and required domestic branding and

R&D development. In 2001 licenses for CDMA mobile phone production were issued to 18

domestic firms and Motorola; Nokia received a license in 2003; no more licenses will be issued.

The government restricts importation of CDMA handsets with quotas and charges an extra 2.5 to
5% of total sale volume if joint venture firms sell CDMA handsets in China. The government
required domestic CDMA mobile handset manufacturers to own their own brands, have
independent R&D capability and/or possess appropriate patents.

In summary, tariff reduction, preferred interest rates, subsidies for R&D, regulations of
market entry, and many other measures were implemented in China to support its mobile handset
manufacturing sector. Telecommunications service providers also are encouraged by the
government to purchase products of domestic venders. An extreme example is that the Chinese
government organized supply-demand coordination conferences to promote the adoption of
domestic products (Lu and Wong, 2003). In addition, numerical targets for export, production
and R&D have been suggested by the government (MII, 2004). The government has been an
important factor in the development of China’s handset manufacturing sector and closing the
technology capacity gap.

V. CONCLUSION

China is the largest handset market in the world and this market continues to grow at an
extremely rapid rate. Before 1999 China’s mobile handset market was completely dominated by
foreign brands products. However, since the entry of Chinese domestic mobile handset
manufacturers in 1998, the domestic suppliers have gradually established their position to
surpass the market share of joint ventures while direct imports have been largely phased out.

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

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