Apple's iPhone in China: CanApple Cash in on the World's BiggestMobileMarket?
Details
Themes: Strategy
Pub Date : 2009
Countries : India
Industry : Telecommunications
Buy Now
Case Code : COM0241
Case Length : 08 Pages
Price: Rs. 200;
IBSCDC regularly updates the list of free cases. To view more free cases, please visit our site at frequent intervals.
Mobile Handset Market in China Contd...
|
Post-1994,mobile services received a boost as the Chinese telecommunications industry underwent transformation. China United Telecommunication Corporation (China Unicom) was incorporated to improve the quality of telecom services, dissolve the monopoly of MPT and enhance competition. China Unicom introduced Global System for Mobile (GSM) technology, the 2nd Generation (2G) digital cellular system for mobiles. Furthermore, MPT was made the nation’s telecommunications regulator and its operating division was registered as a separate entity, called China Telecom, with services in fixed-line, mobile, paging and satellite telecommunications. Consequently, China Telecom and China Unicom offered mobile services in China. However, after 1997, the industry further transformed with a series of reforms and restructurings, intended to encourage healthy competition among the players. As a result of the reforms, MPT was replaced with Ministry of Information Industry (MII) and China Telecom was diversified into several businesses, based on its functional areas. The mobile service business of China Telecom was transferred to China Mobile Communications Corporation (China Mobile). |
Thereafter, China Mobile and China Unicom, the state-owned companies, operated
in the Chinese mobile telecom market with duopoly structure. In 1998, China Unicommerged with
Great Wall Communications Limited7,whichwas into digital Code Division Multiple Access (CDMA)
technology and started CDMA services. During this period, the mobile subscriber base grew for
both GSMand CDMA technologies increasing the mobile handset supply in Chinese mobile market.
For a span of 4 years, from 1996, the global handset brands like Motorola, Ericsson and Nokia held80%of the market share, while the remaining 20%was captured by other foreign brands like Philips,
Siemens and Alcatel.8 Most of these brands also took up localised production and Research and
Development (R&D) activities to fulfil the demand.
Since 1998, domestic players too joined the competition. The long-termdominance of Motorola,
Ericsson and Nokia, both in terms of handset manufacturing and infrastructure, was challenged by
local brands like Ningbo Bird, Konka and TCL. The government encouraged domestic
mobile handset makers by issuing licenses for manufacturing both GSM and CDMA handsets. In
2004, 49 licenses were issued comprising of 30 GSM (issued to 13 joint venture companies and 17
domestic enterprises) and 19 CDMA licenses (all were granted to domestic enterprises except one
for Motorola).9 However, as domestic companies lacked telecom expertise, they partnered with
Korean, European and Japanese companies to acquire the technical knowledge and thereby improve
competitive ability. The local brands designed handsets similar to the foreign brands and offered themat low prices. They also developed sales channels of their own - unlike foreign brands
(like Motorola), which relied on wholesale agents for marketing and distribution - and focused on
rural areas.
7]The Great Wall Communication Limited was established by People's Liberation Army and MPT to develop CDMA mobile service for the Chinese army.
8]"Developments in China's Mobile Handset Industry", op.cit..
9]Ibid.