Dbtel Inc (大霸電子), a leading mobile phone vendor in Taiwan, said yesterday it may leave the Chinese cellphone market in order to stay afloat, as overcapacity has pushed its Chinese unit into the red.
Dbtel received approval from Beijing in 2000 to sell its own-brand handsets in China, beating local rivals in tapping into what is potentially the world's largest market.
Alan Liu (劉世強), a manager from Dbtel's financial division, in a phone interview with the Taipei Times, said "Halting our mobile business in China to save the company is an option. We cannot afford the losses. The market conditions there are not good."
However, the company's management has not yet made a final decision, Liu said.
Dbtel, which used to be one of the top five brands in China, is shrinking the size of its Chinese operation in Shanghai as part of its greater efforts to narrow losses caused by a supply glut, Liu said, adding that the company had also stopped developing new models.
Dbtel is in the process of getting rid of excess inventory built up over the past few years, he said without giving specific figures. Liu, however, said the company will re-invest in the Chinese market in the future once the company begins to see a turnaround in profits there.
Dbtel's net losses widened to NT$4.07 billion (US$123 million) for the first three quarters of this year from a year earlier, with soaring non-operating losses of NT$3.4 billion largely coming from its Shanghai unit, according to the company's filing with the Taiwan Stock Exchange.
The company lost NT$4.94 a share during the period compared to losses of NT$0.83 a year ago, according to the statement.
Poor financial results have sent Dbtel shares nosediving around 83 percent to NT$1.67 yesterday from NT$9.6 at the beginning of the year on the nation's over-the-counter Gretai Securities Market.
To prevent the debt-ridden Chinese unit from dragging down the company's finances, Dbtel chairman Michael Mou (莫皓然) said in September that they would not pour any more money into the unit.
Mou said his company would concentrate its strength on the home market and other emerging markets such as Southeast Asian nations and Middle East countries.
In addition, Dbtel is also attempting to make mobile phones for other brands on a contract basis as the company has done before, Mou said.
The company has not clinched any contract as yet, Liu said.
Despite Dbtel's short-lived success in China, local mobile phone vendors are still trying to grab a share of the massive market, which consumes 80 million units a year.
BenQ Corp (明基), Inventec Appliance Corp (英華達) and MiTAC International Corp (神達) got permission earlier this year to sell phones in China, after a five-year wait.
Gigabyte Communications Inc (集嘉通訊), Asutek Computer Inc (華碩電腦) and Dopod International Corp (多普達) are also trying to extend their new handset business into the market by cooperating with Chinese vendors.
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