Fri, Mar 07, 2003 - Page 10 News List

Government backs down on phone-import policy

By Annabel Lue  /  STAFF REPORTER

The government's recent decision to make a U-turn on a plan to lift a ban on the importation of China-made handsets was met with mixed reactions by analysts yesterday.

The Board of Foreign Trade, expected to announce the lifting of a ban on China handset imports this month, put the plan on an indefinite hold Tuesday.

The move would have allowed entry-level Chinese cellphones to be shipped into Taiwan, while color-screen, high-speed transmission GPRS (general packet radio system) handsets would not be allowed ashore.

The change in policy came after Taiwan Electrical and Electronic Manufactures' Association (電電公會) expressed opposition to the importation of China-made handsets earlier this week.

The association is a group representing several local handset makers, including BenQ Corp (明基電通), Compal Communications Inc (華寶通訊) and DBTEL Inc (大霸), who submitted an industry report to the government suggesting that the ban on China handset imports shouldn't be lifted until China opens its market to Taiwan handsets, association representative Chen Yann-Jiun (陳炎君) said.

Under Chinese regulations, Taiwanese phone-makers are not permitted to sell handsets under their own brand names in China.

One exception is DBTEL, which obtained a permit to sell its phones in China prior to that nation's WTO entry.

"The Chinese government protects domestic telecom companies very well, therefore the ban is not expected to be lifted soon," said Sonia Lu (呂懿慧), a researcher at the Industrial Technology Research Institute, a government-funded research center.

In accordance with China's WTO-entry agreement, the barrier to imports is slated to end within the next three to five years, Lu said. "However, China has never revealed a timetable for the change," she said.

While the banning on China-made handsets helps local manu-facturers of entry-level handsets to protect their market share, mobile-phone retailers and consumers lose access to more low-priced handsets, analysts said.

Yet the real battle among handset makers is over market share, a market watcher said.

"The government plans to open entry-level markets, and that sector is worth fighting for," said Wang Ying-yu (王英裕), a telecom industry analyst at the government-funded Industrial Technology Intelligence Service.

Entry-level products account for 50 percent of Taiwan's handset sales, he said.

Some 5.5 million mobile phones were sold in Taiwan last year, of which first-tier products priced higher than NT$13,000 accounted for 10 percent, middle-tier handsets priced between NT$7,000 to NT$13,000 were some 40 percent, while the remaining 50 percent were entry-level phones priced below NT$7,000.

Competition in the entry-level cellphone sector will continue to be tough.

"With many handset companies choosing to mainly manufacture color-screen mobile phones this year, they will be under pressure to clear their inventories of black-and-white handsets," Wang said.

Therefore, more price-cut activities are expected and will make the entry-level markets more competitive, he said.

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