By Li Weitao (China Daily)
Updated: 2007-11-19 10:56

Yet the latest model may not appeal to Chinese customers, says Pang. "Consumers are now quite sensible in purchasing mobile phones. They either pay a higher price for premier foreign brands like Nokia, Motorola, Sony Ericsson and Samsung, or buy the cheapest home-grown brand," he says.

"Alcatel is nowhere in either of those two ranges, just like companies including LG that have problems in market positioning."

The sagging Alcatel brand before TCL's takeover was largely hurt by the French firm's slow response to fast-changing and usually unique local tastes.

Now the red-hot competition seems to have left little room for the survival of Alcatel-branded mobile phones.

There are now nearly 90 handset manufacturers in China. In September more than 3,000 GSM models were sold in the market, says Pang. The CDMA market remains much smaller.

Previously all companies needed to apply for a license before manufacturing and selling mobile phones in China. The government recently scrapped the licensing scheme, which used to be quite lengthy and strict. That has opened the floodgates for new market entrants. Pang forecasts the number of players will continue to rise.

The total GSM handset sales are projected to hit 150 million units this year and the growth will be brisk next year. But almost every player "is having a difficult time as the market is becoming incredibly overcrowded - except for Nokia, which has expanded its share to nearly 40 percent, taking advantage of Motorola's recent woes," says Pang.

Blackberry pitch

Along with the GlamPhone Elle N3, the Alcatel-branded Blackberry 8700 smartphone will also be sold, targeting enterprise users in China.

Late last month Alcatel-Lucent and Research in Motion announced a distribution agreement to sell Blackberry phones in China.

The TCL Communications' spokesperson says the company will be responsible for part of the manufacturing of Blackberry phones, which are quite popular in North America.

Yet GFK's Pang says Blackberry is less likely to be as popular in China as in North America.

"It's a niche market," he says. "But for TCL and Alcatel, manufacturing and distributing Blackberry still presents a decent opportunity."

Research in Motion last year reached a service agreement with China Mobile to introduce the Blackberry to China after years of negotiations and delays. Yet the firm has been unable to manufacture and directly sell the phones on the mainland due to the licensing regulations. Users before had to buy them outside the mainland such as in Hong Kong.

Yet there is already "early interest and momentum in China with both multinational and domestic corporations", says Jim Balsillie, Co-CEO of Research In Motion, in a statement.

According to Shanghai-based iResearch, by 2008 China will have 1.1 million mobile phone users who receive and send e-mail using their handsets. The number is forecast to hit 2.8 million by 2010.

China had 523 million mobile phone subscribers by September, show statistics by the Ministry of Information Industry.

Given the sheer size of the subscriber base, even a small share of the market would present a chance for Research in Motion, Alcatel-Lucent and TCL as Blackberry targets corporate users.

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