Two Chinese phone handset makers, Ningbo Bird and Amoi Electronics, posted huge losses in the first three quarters compared with profitability a year ago.

 

The companies, both listed on the Shanghai Stock Exchange, forecast a loss for the whole of 2007 as fierce competition increases in the market.

 

Ningbo Bird posted a loss of 270 million yuan (US$36 million) in the first nine months, with the second-largest Chinese phone maker expecting a loss this year, compared with a net profit of 30.58 million yuan in 2006.

 

Xiamen-based Amoi Electronics reported a loss of 460 million yuan in the first three quarters.

 

"We expect the company to lose money in the whole year, though the fourth-quarter results will be much better," said Amoi, without providing detailed figures. The company earned 24.21 million yuan last year.

 

Ningbo Bird's share price dropped 0.65 percent to 4.57 yuan and Amoi's price lost 4.37 percent to 5.25 yuan yesterday, while the Shanghai Composite Index rose 2.83 percent.

 

Foreign-brand firms, such as Nokia and Samsung, have strengthened their promotion of products in the entry-level market, which has pressured domestic firms.

 

"Mobile phone makers will face a shuffle of market positions in China after the country relaxed licensing regulations on handset manufacture," said Kevin Wang, an analyst at iSuppli, a US-based research firm.

 

Two weeks ago, China's State Council abolished the decade-old mobile phone production license examination and approval system.

 

That means new players will replace the market positions of older firms like Ningbo Bird and TCL Communications.

 

Tianyu, the Beijing-based handset vendor, is expected to sell 13 million mobile phones in 2007, a 113.1-percent growth since 2006, making it China's third-largest OEM (original equipment manufacturer) handset maker. Bird, which led the OEM market in 2006, is expected to sell 12.5 million units this year to rank in fourth position behind Tianyu, according to iSuppli.

 

ZTE and Huawei, both with strong telecom equipment backgrounds, will be the top two OEM makers in 2007, according to iSuppli.

 

In the first eight months this year, telecommunications revenue of Chinese firms grew only 4.4 percent annually, compared with a 41.9-percent growth a year ago.

 

(Shanghai Daily October 30, 2007)