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SCMP Reporter

Nokia, the world's largest mobile-handset maker, is catching up with rival Motorola in the Chinese market, narrowing the gap between the two in the first half.

Colin Giles, vice-president and general manager of Nokia Mobile Phones in China, said a strategic shift towards localisation had helped boost the Finnish company's market share.

He said Nokia was now lagging Motorola by a very thin margin and  was confident it could outpace its American  rival to become the top-selling  handset brand in China.

'The difference between us and Motorola now is very small. I think it's a very achievable target for us to make,' Mr Giles said.

Despite Nokia's warning that its second quarter sales might be slower than expected due to the Sars outbreak,  Mr Giles remained upbeat about its full-year performance.

According to Gartner Dataquest, Nokia sold 2.1 million handsets in China last year, giving it a 16 per cent market share. Motorola sold 3.4 million handsets, taking 26 per cent of the pie.

Localisation measures by Nokia in the past 12 to 18 months had contributed to its improved sales performance in the first quarter, Mr Giles said.

They included localisation of product design and the provision of a wider range of products; the introduction of provincial distributors to reach second-tier cities; and the doubling of its sales force and the establishment of 50 offices.

Mr Giles blamed  strategic mistakes  such as being distant from users and the lack of a wide range of products for losing market share in China in the past couple of years.

'What we lacked then was closeness to the market, the understanding of the market and the understanding of how sales and distribution work,' he said.

China's handset market had changed and a wider range of product segmentation and more  localised features were needed to meet the needs of users, he said.

'It's no longer possible to be No1 in China by having one strong product. If you want to be No1 you need to have a wide range of products covering a wide range of market segments,' Mr Giles said.

The  company is planning to launch 15 new handset models in China this year, compared with less than five new models a year previously.

'We have a mix of distribution between national distributors, which play a very positive role in developing the market, and local distributors, which give us a little more local favour and help us penetrate more into smaller cities,' Mr Giles said.

He said the balanced distribution channel mix had been working  well and  helped Nokia gain market share over the past couple of quarters.

The strategic shift had also helped Nokia escape the recent inventory build-up most rival handset makers - including Motorola - had been facing, Mr Giles said.

Mr Giles said the balanced distribution mix allowed Nokia to efficiently place certain products for the national market as well as  cater for provincial markets.

The pending launch of CDMA mobile handsets in the second half will further improve Nokia's market position.



Shift in strategy lifts Nokia's share of China  market