Lenovo outlines lofty goals for handset biz
By Zhu Boru (China Business Weekly)
Updated: 2004-04-13 11:04

Lenovo, China's leading IT (information technology) firm, vows to seize more than 10 per cent of the country's mobile phone market by 2006.

The company expects to grab 4 to 6 per cent of the market by year's end, to become one of the major mobile phone makers in China, said Liu Zhijun, general manager of Lenovo's mobile business.

The company plans to be ranked among the leading players, with 10 to 12 per cent of the market, by the end of 2006, he said.

Lenovo currently holds a meagre share, about 1 per cent, of China's vast cellphone market, experts estimate.

Insiders estimate market demand this year for mobile phones will reach 69 million units. Last year, the figure was 60 million.

To achieve its ambitious goals, Lenovo will double its investment in research and development (R&D) this year, and will independently develop more than 80 per cent of its handset models, Liu said.

Lenovo holds the intellectual property rights to more than 70 per cent of its handsets, he added.

The company will strengthen its co-operation with two major technological partners -- Texas Instruments and Microsoft, which provide, respectively, mobile phone chips and the software for smart phones.

Lenovo will also establish a mobile phone manufacturing base in Xiamen, in East China's Fujian Province. It will be the first of its kind in China, and will provide a full production line for mobile phones, Liu said.

Among the existing products, three series of mobile phones designed for business people, women and lovers of digital devices will be flagship products this year.

That will help Lenovo satisfy consumers' diverse needs, company officials said.

Lenovo's cellphone business has suffered losses since early last year, despite growth in the firm's profits.

The Hong Kong-listed company earned HK$325 million (US$41.67 million) in profit during the financial quarter that ended in December. That was up 2.3 per cent year-on-year.

However, the firm's cellphone business lost 42.72 million yuan (US$5.15 million) in the previous financial quarter, which ended last September.

After several years of strong growth, China's cellphone market is oversupplied, and several handset makers -- including Alcatel and Toshiba -- have also suffered losses.

Experts expect a major reshuffling among handset makers this year.

Specifically, those relying heavily on lower prices instead of core competitiveness -- including brand-awareness, research and development and management -- will probably die out, they suggest.

Ministry of Information Industry statistics indicate the top five handset makers in China, based on market share, are Ningbo Bird, Motorola, TCL, Nokia and Konka.

Ningbo Bird, TCL and Konka are domestic brands.

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