Nokia, Sony Ericsson bulk up in China

Nokia Corp. is deepening its hold on the Chinese handset market, the world’s largest cellphone market and also one of its most rapidly growing.
The Finnish handset vendor signed a strategic agreement with China Postel Mobile Communications Equipment Co. Ltd., the largest distributor of handsets in China, according to Nokia. China Postel is expected to buy about $2.5 billion worth of handsets this year. It distributed more than 30% of the handsets sold in China last year.
The two companies will expand their current partnership, which dates to 1998, with investments in “network channel development,” presumably referring to distribution networks.
Nokia is not the only handset vendor working on the China situation. On Wednesday, Sony Ericsson Mobile Communications won two handset deals in China, which could boost its fortunes there.
SEMC will sell about $521 million worth of handsets to Shenzen Telling Communications Corp., a domestic distributor. A second deal, with PTAC-the state-owned China National Postal and Telecommunications Appliances Corp.-accounts for another five million handsets to be sold by Sony Ericsson. According to the China Daily, about 60% of the handsets in the latter deal will involve mid-range and entry-level models, some priced at about $52. That reflects one flank of Sony Ericsson’s accelerated effort to grow its annual volume shipments and gain market share, while not competing at the very low end, where volume growth could sap its enviable profit margins.