The company is also working with China Mobile and China Unicom to provide custom 3G handsets.

Rong estimated that purchasing orders from telecom operators are expected to contribute to more than half of China's mobile phone market this year, compared with 20 percent last year.

"Most of the 3G handsets now are expensive, and what we want to do is to make smart phones affordable to Chinese users," Rong said, noting that the price of Tianyu's 3G handset is between 1,000 to 2,000 yuan.

Although Tianyu only gained 4.5 percent of the market share in China in the first quarter, far lower than market leader Nokia's 30 percent share, there are signs the gap is narrowing.

According to figures from the research firm GFK, shipments of GSM phones, in which Nokia holds a major share, declined by 7 percent in the first quarter, while CDMA mobile phone shipments surged 143 percent.

Industry analysts said the recent disputes between Nokia and its Chinese distributors, who accused the Finnish cell phone giant of monopolizing prices and evading taxes, might also reduce the market share of Nokia in China.

"I think China's 3G era may be the last opportunity for Chinese cell phone vendors to surpass foreign rivals," Rong said.

(China Daily August 17, 2009)