Nokia working to maintain grasp on Chinese handset market

Nokia Corp. announced today it signed a “strategic partnership agreement” with China’s largest distributor, China Postel, for up to $2 billion in mobile handsets this year.
Nokia’s announcement noted that China Postel is “expected” to make purchases of that magnitude, rather than committed to such a purchase. It also said the two parties would “strengthen strategic ties” in distribution channels, marketing and “resource investment,” a partnership model common to foreign investment in China.
Today’s agreement reflected Nokia’s close attention to the world’s largest market, in which it claims a leading market share. According to media reports, Nokia sold more than 70 million devices in the country in 2007, up 39% over the prior year. With once-rival Motorola Inc.’s global market share shrinking by more than 10% in 2007, Nokia has good reason to cement relations with its partners in China. Low-cost handset sales in populous countries such as China and India, which are seeing phenomenally rapid growth in mobile use, help fuel Nokia’s ability to claim 40% global market share.
China Postel Mobile Communication Equipment Co. Ltd., a subsidiary of China P&T Appliances, has a nearly 30% market share in the distribution of handsets and mobile telecom services, according to Nokia. The two companies have worked together since 1998. Nokia achieved its market-share leadership in China in 2004, according to the company.
Data from M:Metrics assigns Nokia a nearly 31% market share of handsets in China. Most Chinese consumers, particularly in urban areas, strongly prefer recognizable, multinational brands over the plethora of domestic handset choices, according to M:Metrics and other market analysts.