TD-SCDMA offers hope for China's mobile makers

The imminent introduction of 3G mobile phones in China could offer a lifeline to the country's beleaguered handset makers.

Despite a strong consumer electronics manufacturing industry, Chinese companies have been practically shut out of the domestic handset market by foreign firms like Nokia and Motorola which have more than 70 per cent of the market.

China's introduction of 3G networks has been held up by bureaucracy for several years while researchers work to perfect the country's home-grown TD-SCDMA technology.

Despite severe teething troubles during testing, TD-SCDMA is now reported to be ready, and the government is expected to begin issuing 3G licences in time for the Beijing Olympic Games.

"Of the projected 140 million handset sales in China in 2008, 20 to 50 million will support China's proprietary 3G standard, representing a penetration of 14 to 35 per cent," said Hua Yang, secretary general of the TD-SCDMA Industry Alliance which represents firms behind the standard.

Analysts from Beijing-based CCID Consulting believe that China's huge mobile market is an opportunity for all major domestic mobile phone makers.

China's mobile operators are currently testing TD-SCDMA handsets, and the country's domestic mobile phone brands have accounted for half of the tests organised by the operators.

As only a few foreign firms, such as Samsung, have gained entry, domestic brands can be on an equal footing with foreign brands in the test, CCID's analysts said.

Nokia currently sells 31 per cent of all handsets purchased in China, followed by Motorola with 22.5 per cent, and Samsung with 9.8 per cent, according to CCID.

No local firm has more than five per cent market share. The leading Chinese brand, ZTE, holds 4.8 per cent.