A former leader in the mobile phone sector, Finland’s Nokia encountered problems after the 2007 launch of smartphones, particularly Apple’s iPhone, as well as devices running on Google's Android operating system. In February 2011, Nokia formed a strategic partnership with Microsoft, with Nokia smartphones replacing Nokia’s traditional Symbian operating system with a mobile system from Microsoft. Microsoft bought Nokia's handset business for 5.44 billion euros in September 2013.
Ningbo Bird seizes lead in mainland mobile market
Middle and low-end maker topples Motorola from handset sales leadership
Ningbo Bird has become the first Chinese mobile-phone maker to beat foreign rivals for the biggest slice of the mainland market.
According to a report by the Ministry of Information Industry (MII), Ningbo Bird captured 15.01 per cent of the mainland's handset market in the first six months of this year, pushing Motorola, with 14.21 per cent, into second place.
The Chinese manufacturer, which mainly targets the middle and low-end markets, attributed its market dominance to a better understanding of local preferences and lower prices. A Ningbo Bird spokesman said a wider network of distribution channels was another reason for the success.
Leading foreign brands such as Motorola and Nokia sell a higher proportion of high-end products.
In the first six months, local brands claimed 55.28 per cent of the domestic market, 16.21 percentage points higher than their share for the whole of last year.
TCL, another major mainland handset maker, ranked third with 11.64 per cent of the domestic market, followed by Nokia's 9.72 per cent and Konka's 6.65 per cent.
Industry observers said some players might have adopted aggressive pricing strategies to increase market share at the expense of profit margins. Average prices have been falling and the handset industry has seen margins squeezed as product life cycles become ever shorter amid over-production.
The MII report said there were 37 handset manufacturers with a combined annual production capacity of 200 million units at the end of last year. The mainland produced 82.19 million handsets in the first half and sold 80.03 million units - about 43.16 million domestically and 36.86 million for export.
Sales of GSM and GPRS handsets grew 48.8 per cent year on year to 70.78 million units, while sales of CDMA models rose 341.2 per cent year on year to 9.24 million units. Ningbo Bird's gross profit margin fell to 16.3 per cent in the first half, down from 17.6 per cent in the same period last year. The figure hit 15.6 per cent in the second quarter.
TCL's gross margin fell to 19 per cent in the first quarter from 23 per cent in the fourth quarter last year.
Ningbo Bird sold nearly 6.5 million handsets in the first six months and posted a 90 per cent year-on-year gain in net profit to about 107 million yuan. Turnover rose 162 per cent to 5.73 billion yuan.
A BOC International report said Ningbo Bird made a 110 million yuan provision on its inventory on the expectation of further price cuts. 'We believe there will likely be more provisions against unsold inventory in the second half,' the report said. The Ningbo Bird spokesman said high inventory levels were necessary to keep pace with growing sales.
The company has set a sales target of 12 million handsets this year.