Nokia celebrates two decades in China - company expects further growth

Jorma Ollila

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Nokia Chairman and CEO Jorma Ollila believes that China could become the company's largest market area already in the next three years. Ollila was in Beijing on Wednesday celebrating the 20th anniversary of Nokia operations in China.
      The mobile telephone giant believes that in the coming years up to one in every four new users of mobile telephones will be in China. The country also has more users of mobile phones than any other country.
      Nokia is the market leader in mobile telephony in China; although 2004 was a difficult year for Nokia on the global scale, in China the company's sales grew by 44%. "We had a very, very good year in China, and we believe that the strong performance will continue", Ollila said.
      China already accounts for about 10% of Nokia's worldwide turnover. The United States accounts for 13%.
     
Nokia expects the number of mobile phone users in China to nearly double by 2010. Meanwhile, many existing subscribers are upgrading to new handsets. Existing users already account for an estimated 66% of handset sales in China. Many of these buyers are attracted by the brand names and quality of large international manufacturers.
      "The quality of the telephones of many Chinese manufacturers has been poor. Many buyers have noticed problems and have switched to a foreign model", says Martti Mustila, head of marketing at Sino Market Research.
      Nokia has also benefited from expanding its distribution network, which has allowed it to get its phones to consumers better than its competitors have.
     
"Improving coverage has been the key. The number of our regional sales offices has increased in two years from four to 50", says Colin Giles, director of Nokia Mobile Phones China.
      Distribution is not easy in a country with 174 cities with more than a million people. Giles says that Nokia's distribution network extends to rural areas, suburbs, and built-up areas. Nokia has advertised its brand on Chinese national television channels for years.
      Nokia does not release information on its market shares in individual countries, but analysts say that the Finnish company accounts for 19 - 22% of China's mobile handset sales.
     
In addition to being a major market area for Nokia, many of the company's products sold in the rest of the world are manufactured in China.
      Last year Nokia's exports from China to other countries almost equalled its sales within the country. Exports surged by 56% to a record 3.3 billion dollars last year, making Nokia one of China's largest export companies.
      Nokia's research and development operations in China have also increased. Earlier this month, Nokia signed an agreement with the administration of Zhejiang Province for the establishment of a new innovation centre.
      "It has been important to create models designed specifically for China", Giles says.
      One such model is a clamshell phone with a screen onto which the user can write Chinese characters.
      Original design is important in China, where an amazing 628 new mobile telephone models were introduced last year.


Links:
  Nokia press release: Nokia celebrates 20th anniversary in China, world's largest phone market

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