The country will add a further 160 million users from next year until 2010, Espoo, Finland-based Nokia said in a statement issued in Beijing today. China had 449 million users as of October, more than the populations of Japan and the U.S. combined.
Nokia and its biggest rival Motorola Inc. are increasing market share in China by selling low-cost models to the more than 800 million rural residents, taking advantage of faster growth in developing nations. Fewer than four out of 10 people own a handset in China.
``We have a fantastic opportunity here, both in the volume and the value of this market,'' Colin Giles, senior vice president for customer and market operations for the Greater China region, said in a statement.
China is Nokia's biggest market by sales, contributing almost 12 percent in the first nine months of 2006, and helping to offset slowing growth in Europe and the U.S. Revenue in China reached 3.4 billion euros ($4.5 billion) last year.
Nine-month revenue, including sales of handsets and network infrastructure, gained 45 percent to 3.95 billion euros in Greater China, which includes Hong Kong and Taiwan, Giles said. Sales in the region rose 29 percent to 3.85 billion euros last year, making up 11 percent of Nokia's revenue, compared with 8 percent for the U.S.
$45 Handsets
In the first nine months, Nokia sold 8 million units of its low-cost Nokia 1100 model, Giles said. The Nokia 1100 retails for about 350 yuan ($45). The company expects 120 million cell phones to be sold in China this year, up 26 percent from 2005. Of the total, 70 million are expected to be replacement handsets.
``We expect the growth here in China will continue to be very strong,'' Giles said. He reiterated Chief Executive Officer Olli-Pekka Kallasvuo's expectations that the global number of mobile-phone users will rise to 4 billion by 2010.
The company expects the number of global mobile-phone subscribers will reach 3 billion in 2007, a year earlier than previously forecast. More than half of the growth will come from emerging markets in Asia including China and India.
Market Share
Nokia said it sold 36.6 million mobile phones in China in the first nine months of this year, already more than the 32.5 million units sold for the whole of 2005. The company said it had a 35 percent China market share at the end of the third quarter, citing researcher GfK.
The company was the leading foreign mobile-phone maker in China in the third quarter, with a 36.6 percent share of the market, ahead of Motorola, which had 23.3 percent, according to researcher IDC.
In the third quarter Nokia handset shipments rose 19 percent from the previous quarter, compared with Motorola's 15 percent gain, IDC said.
``Nokia is making all the right moves by going to the rural areas and expanding its distribution,'' said Aloysius Choong, an analyst at IDC.
The company is expanding its distribution network in China to target the secondary cities and currently has 46,555 outlets in the country, a gain of 10 percent from a year ago, Giles said. The company also sells its products through 20 retail partners such as Gome Electrical Appliances Holdings Co., China's largest home-appliance retailer.
Motorola Models
Motorola, the world's second-biggest mobile-phone maker, yesterday said it may gain market share this quarter, helped by new products such as the Krzr.
The phone, a smaller version of the two-year-old Razr, along with the low-cost Motofone, which started selling in India this week, have been shipping at levels the company expected, Chief Executive Officer Ed Zander said at a technology conference in Scottsdale, Arizona.
Nokia today said it will start selling four handset models in China in the first quarter of next year. The Nokia E62 is customized to offer China Mobile's Pushmail, an e-mail service, will be on sale in January and retails around 4,000 yuan.
Nokia has has six research and development units, four manufacturing sites and four joint ventures in China.
To contact the reporter for this story: Janet Ong in Beijing at jong3@bloomberg.net
Last Updated: December 1, 2006 01:09 EST
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