NEC To Cut Cellphone Range, Number Of Outlets In China"

TOKYO -(Dow Jones)- Japan's NEC Corp. said Wednesday it will cut the number of mobile phone models it markets in China and reduce the number of its outlets on the mainland in the face of stiff price competition.

Major Japanese handset makers are finding it difficult to generate profits as they are losing their competitive edge in terms of costs and product lineups in comparison with overseas giants such as Nokia Corp. and Samsung Electronics Co.

Major electronics maker NEC had planned to increase the number of handset models it sells in China this fiscal year from more than 20 that it had on offer there last fiscal year.

It now expects to offer nearly the same number of models there this fiscal year, and will reduce that number next fiscal year, an NEC spokeswoman said.

By focusing on high-performance handsets costing CNY2,000 or more, NEC aims to avoid getting into a price war in the Chinese mobile phone market with South Korean, U.S., European and local Chinese rivals.

NEC is also reducing its sales network in China to 2,000 stores from 2,500 by closing unprofitable shops to cut sales and marketing costs.

Its phone handset business incurred an operating loss of about Y15 billion for the first half ended September due to intense price competition overseas, the company said in October. At that time it also slashed its global phone shipments target this fiscal year to about 10 million units from 15 million units.

In another sign of the problems facing Japan's handset makers, Matsushita Electric Industrial Co. (6752.TO) last Friday announced plans to reform its overseas mobile phone operations including the closure of a factory in the Philippines.

-By Yoshio Takahashi, Dow Jones Newswires; 813-5255-2929; yoshio.takahashi@dowjones.com

-Edited by Hugh Lawson

(END) Dow Jones Newswires"

Posted to the site on 14th December 2005