Nokia Oyj, the world's biggest cell-phone maker, expects the number of handset users in China to rise 11 percent to more than 500 million by next year, boosted by growth in rural areas.
The country will add a further 160 million users from next year until 2010, Finland-based Nokia said in a statement issued in Bei-jing yesterday. China had 449 million users as of October, more than the populations of Japan and the US combined.
Nokia's profitability is being squeezed as sales of low-cost handsets in developing nations such as China and India eroded margins. China is Nokia's biggest market by sales, contributing almost 12 percent of revenue in the first nine months of the year and helping offset slowing growth in Europe and the US.
Nokia said it sold 36.6 million mobile phones in China in the first nine months, already more than the 32.5 million units for the whole of last year. The company was China's top handset seller in the last quarter with a market share of 36.6 percent, ahead of Motorola Inc's 23.3 percent, according to researcher IDC.
"We have a fantastic opportunity here, both in the volume and the value of this market," Colin Giles, senior vice president for customer and market operations for the Greater China region, said in a statement.
The company on Tuesday reduced its operating margin forecast to 15 percent in one to two years, from an earlier estimated 17 percent. The margin was 13.6 percent last year.
Nokia's revenue from its operations in China reached 3.4 billion euros (US$4.5 billion) last year. The company and closest rival Motorola aim to attract the more than 800 million Chinese rural residents with low-cost cell phones. Fewer than four out of 10 own a handset in China.
Nokia's nine-month revenue, including sales of handsets and network infrastructure, gained 45 percent to 3.95 billion euros in Hong Kong, Taiwan and China combined Giles said. Sales in the region rose 29 percent to 3.85 billion euros last year, making up 11 percent of Nokia's revenue, compared with 8 percent for the US.
Nokia expects 120 million cell phones to be sold in China this year, up 26 percent from last year. Of the total, 70 million are expected to be replacement handsets.
"We expect the growth here in China will continue to be very strong," Giles said at a briefing.
He reiterated chief executive officer Olli-Pekka Kallasvuo's expectations that the global number of mobile-phone users will rise to 4 billion by 2010. Nokia expects the number of cellphone subscribers worldwide to reach 3 billion next year, a year earlier than previously forecast. More than half of the growth is expected to come from emerging markets in Asia including China and India.
The company is widening its distribution network in China to target secondary cities and currently has 46,555 outlets in the country, a gain of 10 percent from a year ago, Giles said. Nokia also sells its products through 20 retail partners such as Gome Electrical Appliances Holdings Co (
Motorola, the world's second-biggest mobile-phone maker, on Thursday said it may gain market share this quarter, helped by new products such as the Krzr.
The phone, a smaller version of the two-year-old Razr, along with the low-cost Motofone, have been shipping at levels the company expected, chief executive officer Ed Zander said at a technology conference in Scottsdale, Arizona.
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