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China's Handset Market Market to Defy Economic Downturn

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Defying an expected 10.7 percent decline in global mobile handset shipments, China's domestic wireless phone market is set to maintain its growth in 2009, with a 7.7 percent increase for the year, according to iSuppli.

iSuppli forecasts the domestic handset market will reach 239.1 million units in 2009, up 7.7 percent from 222.1 million in 2008.

"China's three wireless operators are attracting new subscribers by reducing service fees. This will greatly contribute to demand from first-time buyers," said Kevin Wang, senior manager of China research at iSuppli. "New subscribers are expected to exceed 90 million in 2009. Furthermore, more existing mobile users will be subscribe to a second number. Beyond that, the government's broadened subsidy policy for consumer electronics purchases will stimulate demand in rural areas."

Domestic authorized handset market shipments surpassed 180 million units in 2008. Meanwhile, the domestic gray market decreased to about 40 million units in 2008, down from more than 50 million units in 2007. A number of gray market suppliers became authorized brand-name companies. Their business grew dramatically in tier-three and tier-four urban and rural markets.

Foreign handset OEMs occupied 56 percent of China's handset market for 2008. Nokia was the largest handset supplier in China in 2008 with a 37 percent market share. At the same time, Samsung expanded its share of handset shipments.

Tianyu will continue to be the leading Chinese brand in terms of domestic shipments.

3G arrives at last

Although 3G licenses have been issued, iSuppli said that it does not expect domestic 3G handset shipments to increase dramatically during the year.

The total domestic 3G handset market is expected to reach 8 million units in 2009. Low-cost multimedia GSM and ultra-low-cost CDMA handsets should be among the best-selling products of 2009. However, smart phones and handsets supporting 3G and the China Mobile Multimedia Broadcasting (CMMB) standard also will represent high-growth segments.

In term of total unit shipments, Huawei and ZTE are likely to be the leaders in China's 3G handset market.

Both were anticipated to ship more than 30 million units in 2008. Moreover, Huawei is now the largest 3G data card supplier in the world. At the time this was written, Chinese handset manufacturers collectively were projected to ship more than 300 million handsets by the end of 2008. iSuppli forecasts that Chinese handset manufacturers will ship more than 360 million units in 2009 driven by both domestic and export markets.

China Domestic Mobile Handset Shipment Forecast

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