Konka Group, the mainland's second-largest television-maker, wants to reduce its dependence on the low-margin TV business, which has been hit by five years of intermittent price wars and huge oversupply. Vice-financial supervisor and information centre general manager Xu Chuncheng told Business Post the Shenzhen-based B-share firm aimed within five years to earn more than 30 per cent of revenue from mobile-phone manufacturing and about 20 per cent from Internet-enabled consumer electronic products. Television sales account for more than 90 per cent of the firm's sales. 'We are aiming to capture a 20 per cent share of the domestic mobile-phone market within five years,' Mr Xu said. The mainland's domestic mobile-phone manufacturers have a combined market share of just over 5 per cent, while the three foreign giants - Motorola, Ericsson and Nokia - have about 90 per cent collectively. Making its task more difficult, competitor Haier Group also intends to capture 20 per cent of the mobile-phone market. Konka intends to become the top domestic producer of mobile phones with a production target of 1.25 million handsets this year. That would be a 2.5 per cent market share. Mr Xu said Konka had sold about 200,000 handsets since sales started in late January and planned to sell about 3.5 million units next year and about six million units in 2002. To meet production targets, Konka is planning to add a third production line with annual capacity of 1.25 million units in August, bringing its annual output to 2.5 million units. An additional production line is planned for early next year. Konka is among nine mainland firms handpicked late last year by Beijing as pioneers to re-capture mobile-phone market share from foreign producers. There is concern the policy could become a repeat of the import-substitution policy in the television and refrigerator industries, where foreign firms were given market access in exchange for technology, only to see their sales gradually replaced by domestic producers. Analysts said a gradual shift in focus from relatively low-technology products such as television sets and refrigerators to more sophisticated ones such as mobile phones and other consumer electronics with Internet and multimedia capabilities, was a natural industrial evolution. Armed with well-known brand names and developed distribution channels, mainland consumer electronics manufacturers were likely to move up the technology ladder once the traditional markets became saturated, they said. Earlier this month, Konka and eight other TV-makers formed an alliance to set floor prices in a bid to halt the erosion of profits from television manufacturing.