Retail handset market faces shake-up

Taiwan's retail handset market is expected to experience an upheaval, following the government's decision to open up the market for cheaper made-in-China imports as soon as next month, market watchers said.

The new policy might see the nation's phone market in a mess in the short term, because Chinese handset makers might slash retail prices to an unreasonable level to get rid of their oversupplied mobile phones, said Tom Hsiao (蕭承統), president of Motorola Electronics Taiwan Ltd.

The Bureau of Foreign Trade and the Taiwan Electrical and Electronic Manufacturers Association reached an agreement last week to allow imports of Chinese-made handsets as soon as next month, saying the opening-up policy would not have a big impact on the nation's overall industrial environment.

Domestic and foreign branded handset makers, like BenQ Corp (明基), Dbtel Inc (大霸電子), Nokia Oyj, Motorola Inc and Sony Ericsson Mobile Communications Ltd, would also be allowed to sell their own Chinese-made mobile phones in Taiwan by following normal import procedures. This would be conducive to lower prices.

Huang Chih-peng (黃志鵬), director-general of the foreign trade bureau under the Ministry of Economic Affairs, said this decision will challenge the nation's brand name handset makers to a small degree. But as the opening up of the domestic market for China-made mobile phones has become an irresistible trend, local players have to brace for the new competition, he said.

Chinese first-tier handset suppliers, including Ningbo Bird Co (波導), ZTE Corp (中興通信), Huawei Technologies Co (華為科技) and Amoi Electronics Co (夏新電子), are using advanced technologies to manufacture mobile phones that can rival those produced by Taiwanese companies.

But as their mid-range and high-end handsets, like third-generation (3G) compatible models, retail at lower prices, international giants such as Nokia and Motorola might be prompted to review their pricing strategies.

Motorola handsets accounted for nearly 22 percent of the domestic market by the end of last year, outperforming runner-up Nokia by about 5 percentage points, according to Motorola's statistics.

But Hsiao said that -- considering the fact that international brands including Motorola are capable of marketing their handsets at NT$1 per unit -- he is confident it will not be all that easy for phones made in China to secure a substantial market share here.

Scott Huang (黃思齊), managing director of Taiwan's biggest cellphone maker BenQ, appeared unfazed by the looming Chinese competition.

"I believe consumers will take into consideration more elements than just the price before deciding which handset to buy," he said during a telephone interview on Saturday.

He said a phone's brand name, design, quality, appearance and functionality all play key roles in securing a company's market share. He did not elaborate on whether the company will lower retail prices to compete head-to-head with Chinese-made handsets.

BenQ and another Taiwanese mobile phone supplier, Inventec Appliances Corp (英華達), were granted their long-awaited licenses from the Chinese authorities in May to sell branded mobile phones in that populous nation, following in the footsteps of Dbtel.

Therefore, Taiwan's opening-up policy will help the nation and China engage in reciprocal trading relations.