Chinese handset vendors go abroad
By Linda Sui (China Daily)Updated: 2006-12-04 09:20
BDA believes operator channels will be essential in the market in the long term, especially for 3G handsets.
Operators will play a central role in procuring 3G handsets in both developed and emerging markets, focusing on relatively highly customized models in order to differentiate from other competitors. Compared to global leading players, Chinese vendors are more willing to customize products upon operators' specific requirements, so as to give them leverage over global rivals.
Additionally, operator channels also help domestic vendors build up brand awareness in overseas markets, the key step in bringing business abroad. In this scenario, ZTE and Huawei are the best-positioned vendors to extend operator channels.
Of course, alternative strategies may also become more effective in the near future, since open channels still dominate the distribution system, especially in emerging markets.
Geographically speaking, BDA believes most domestic vendors will focus on emerging markets in the short term due to the higher entry barriers in developed markets.
Criteria and requirements for product quality, after-sales service and certification are higher in developed markets, while domestic vendors are usually in a weak position in their R&D and after-sales systems.
Moreover, since developed markets are dominated by big foreign vendors that usually have many IPR claims for core technologies, domestic vendors may also face IRP issues.
In contrast, emerging markets have a strong demand for mid- and low-end handsets, which comprise the majority of domestic vendors' product lineup.
Local vendors' relatively cheap pricing also attracts emerging market customers.
The author is a senior analyst of BDA, a Beijing -based telecom research and consulting firm.
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