The name is absent

While products of joint ventures still control the high-end market, Chinese domestic brands are
becoming the mainstream products in China’s mobile handset market.

By examining China’s mobile handset manufacturing sector as a whole and through case
examples, we found several factors that contributed to the success of China’s domestic handset
manufacturers. Following a framework summarized by Cho et al (1998), we classify these
factors into three categories. First, China’s large handset market supported an immediate
demand for mobile phones. The inherent nature of the mobile phone business was such that it
created opportunities for latecomers to technologically leapfrog. Second, in the intense
competition with joint ventures, China’s domestic producers occupied the domestic market with
the advantages of low prices, extensive distribution channels, high performance-price ratios,
better after-sale service, as well as a better understanding of the local market and tastes. Last,
China growth of the industry has been carefully planned with intervention through government
policies. By playing various roles in a timely manner, the Chinese government has provided
crucial support for development of the mobile handset industry.

The case of China’s mobile handset market suggests China has localized the production
of low-to-medium-end handset products, which gradually destroyed the direct import of these
products and occupied the market which had been dominated by joint ventures. New and high-
end handset products are primarily developed and manufactured by joint ventures or imported
directly from overseas. These high-end products would downgrade to medium-end or low-end
ones over a short period of time. However, by actively investing in R&D and participating in the
establishment of new technology standards, it is possible that China’s local producers will build
their technological competencies and become technological leaders in certain areas.

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

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