Tue, Jun 17, 2003 - Page 10 News List

SARS outbreak hurts April handset sales in China

BLOOMBERG

Mobile-phone sales in China, the world's biggest wireless market by users, dropped almost a 10th in April because the SARS outbreak sapped demand, a government report released yesterday showed. Motorola Inc lost its leading position to rival Nokia Oyj.

Nokia, Ningbo Bird Co (波導) and other makers sold 6.8 million handsets, a decline of 9.4 percent from March, according to CCID Datasource Co, a research unit of the phone ministry. March sales rose 4.7 percent from February to 7.5 million.

The April numbers are the first to reflect the full impact of SARS on China's cell-phone market, which is already suffering because of rising inventory and falling prices.

Motorola, which blamed SARS last week for its decision to cut its full-year profit forecast, sold 24 percent fewer global system for mobile communications, or GSM, phones in April than in March. The US company, the world's second-biggest mobile-phone maker, estimated vendors have 20 million unsold phones in China, almost a third of the country's annual sales.

"The fall in sales because of SARS shouldn't be too big a surprise for the market," said Lily Jap, an analyst at Nomura International (Hong Kong) Ltd. "The key question is how much sellers will allow price cuts to drive sales, especially of phones equipped with colored screens, in the second half."

Sales of GSM-based phones, China's dominant cellular standard, dropped 7.7 percent in April to 6.28 million units, according to the CCID report. By value, they dropped 13 percent to 9.63 billion yuan (US$1.2 billion). That implies the average price of a GSM phone, used by more than 95 percent of China's cell users, dropped 5.8 percent to 1,534 yuan.

TCL Mobile Communication Co, China's No. 2 domestic cell-phone maker, and Konka Group Co are among makers that dropped prices in April. Konka slashed prices of its C869 handset by 37 percent to 1,890 yuan.

Finland-based Nokia, the world's biggest handset maker, increased its share of China's GSM market to 15.3 percent in April from 13.4 percent in the previous month. Schaumburg, Illinois-based Motorola's fell to 14.1 percent from 17.2 percent, the CCID report said.

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