Shenzhen car, battery and components manufacturer BYD will spend at least $1 billion to boost sales this year in an effort to bounce back from a 49 per cent drop in net profit last year, according to its president Wang Chuanfu.
The Hong Kong-listed firm hopes to increase sales of its handset components such as casings and keypads to international mobile phone makers, whose success in the mainland last year ironically led to the sharp decline in BYD's battery business.
International companies such as Nokia and Motorola grabbed substantial market shares from mainland handset makers - which BYD supplied with lithium-ion batteries - causing a 40 per cent drop in the firm's sale of such batteries to 2.1 billion yuan last year. As a result, batteries accounted for 32.3 per cent of BYD's revenue last year, down from 54 per cent in 2004.
The drop in sales was responsible for most of BYD's 49 per cent decline in net profit to 529 million yuan and its stagnant 1.1 per cent growth in total revenue to 6.5 billion yuan last year, said Mr Wang.
'International handset companies introducing new designs and technology are putting pressure on mainland handphone manufacturers,' Mr Wang said.
'From the bottom end, black handsets [illegally made mainland mobile phones] are also grabbing market share from legitimate manufacturers.'