Mobile firms dependent on emerging markets

Growth in the handset market has been driven by markets such as Brazil, Russia, India and China

Mobile phone makers are increasingly dependent on the world's two most populous markets of China and India, according to a new study.

Huge volume and value growth in the handset market have been driven by emerging markets such as Brazil, Russia, India and China, say the authors of a report from Goldman Sachs and branding consultancy Wolff Olins. 

However, the report noted than global margins have remained flat at around 10 per cent, even as smaller competitors are forced out of the market.

"The extraordinary above-average GDP growth of China and India over the past few years has created significant wealth, especially in the cities," the report stated.

"Handsets are a highly aspirational item and still represent a significantly more affordable status symbol than a car or a PC."

Some 80 per cent of mobile phone users in China and India told the researchers that they intended to get a new handset within one year.

However, the report warned that manufacturers risk their products being seen as interchangeable commodities if consumers cannot see any difference between brands.

This fate has already befallen local phone makers in China, whose handsets are poorly received in relation to foreign products.

Nokia, already China's leading handset brand, remains popular in the country and is set to gain further market share, the report stated.