Chinese brands boost mobile suppliers

As Nokia and Sony stumble, the companies that supply their factories have suffered. Now, those suppliers are finding relief from a new quarter: Chinese brands with growing appeal to domestic buyers.

Five of the top six mobile-phone brands on the mainland - the world's largest handset market - are domestic. Only Samsung Electronics still outsells them, while Apple dropped to seventh place in the second quarter of the year and neither Nokia nor Sony was in the top 10, according to research firm Canalys.

With their growing sales of phones, and now tablet computers and internet-linked televisions, the likes of Lenovo, ZTE and Xiaomi are giving a lift to Wistron, FIH Mobile and other embattled contract manufacturers and component makers.

"China's home brands are getting stronger and grabbing market share from traditional global brands that used to outsource assembly," said Jimmy Chen, an analyst at Masterlink Securities in Taipei.

Sony, the world's No3 television maker last year, cut orders from suppliers like Wistron and brought manufacturing in-house as its television business posted its ninth-straight annual loss. Nokia had more than half of the phone market before Apple introduced the iPhone six years ago. After losses of more than €5 billion (HK$52 billion) over nine quarters, Nokia announced this month that it would sell its handset unit to Microsoft for US$7.2 billion.

The decline of Nokia has been particularly hard on FIH Mobile, the Hong Kong-listed subsidiary of Taiwan's Hon Hai Precision Industry, formerly known as Foxconn International.

Nokia, which used to account for 40 per cent of FIH's sales, now represents about 10 per cent, investment bank Jefferies estimates. Xiaomi, which was not a major customer a year ago, is now FIH Mobile's third-largest, accounting for 10 per cent of sales.

Unlike established brands such as Lenovo and ZTE, three-year-old Xiaomi has no manufacturing capacity.

Xiaomi says it has sold more than 17 million smartphones in the past two years.