Siemens expects China mobile shake-out
Only about half of China's 37 mobile phone manufacturers would still be in business within a year because of overproduction and falling prices, predicted the president of Siemens' Shanghai joint venture.
Peter Borger was speaking at a lunch to mark the 10th anniversary of Siemens Shanghai Mobile Communications, of which the German company holds 60 per cent and three Chinese partners the rest.
The venture has an annual production capacity of 14 million handsets.
'Domestic manufacturers have an inventory of 20 million phones,' Mr Borger said. 'The supply channels are full. How to get rid of this inventory? All the foreign suppliers are losing market share.'
On Tuesday, the Ministry of Information Industry announced domestic brands had claimed 55.28 per cent of the mainland market, 16.21 percentage points higher than last year.
Mr Borger said his company had reduced production in the past few months in order not to add volume to an overheated market. 'We produced only what we could sell. We could have sold one to two million more but not at a profit. Domestic makers believe that they can buy market share,' he said. 'It will be like the television industry three to four years ago. There will be a shake-out. Half of the companies will disappear within a year.'
China has 37 licensed handset manufacturers, which last year produced 131.3 million units, of which 57.8 million were exported, mainly by major foreign companies such as Siemens, which expects to export about nine million this year.
Mr Borger put Siemens' market share in China at about 5 per cent. In the financial year to September, it sold three million handsets in China, out of 35 million produced worldwide.
He said Siemens would try to penetrate the third and fourth-tier cities in China that had become the fastest-growing markets.
Group board member Lothar Pauly said Siemens would not compete on price but as a high-value brand. 'We are introducing six models this year for Asia. Asian women, especially Chinese, treat mobiles as an accessory while Europeans prefer 'candybar' phones.'