A South Korean handset maker believes it can survive in the mainland's over-crowded market for low-cost mobile phones by producing cheap but high-quality handsets. VK Corp, which also makes rechargeable batteries, aims to increase monthly production from 200,000 units to 500,000 units next year - primarily in the budget segment. The company began making handsets in China last year. VK Corp chief executive Yi Cheol-sang predicted mainland handset makers in the low-end segment would find it difficult to survive next year after the company launched three to four new GSM phones. The handsets would be priced at less than 1,000 yuan each but would be of better quality compared with phones manufactured by mainland rivals. The Korean firm has set aside US$20 million to build a new plant in Xiamen to expand capacity. 'China is growing very rapidly in price competition, but there is still some room,' Mr Yi said. 'All the [domestically produced] cheaper handsets have some quality issues. But we can produce cheap but stable handsets.' VK Corp presently focuses on the mid to high-end segment, where its handsets sell for between 2,000 yuan and 3,000 yuan each. It plans to launch 14 new models in this segment next year. Mr Yi estimated it would take mainland handset makers two to three years to catch up with South Korean firms in terms of quality. The company hopes the mainland expansion will boost revenue by 40 to 50 per cent from US$200 million expected this year, with China accounting for 50 to 60 per cent of sales. Earnings are expected to reach $20 million to $30 million next year, up from about $5 million this year. VK Corp will need to triple its headcount from 500 staff in China to complete its expansion plan. In April last year, the mobile phone maker acquired a licence to manufacture and sell GSM handsets in China by paying US$10 million for 80 per cent of domestic handset maker Chabridge Equipment, based in Xiamen. It is the second Korean handset maker after Samsung Electronics to establish both manufacturing and sales operations in China.