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Konka Remains Confident After Slow Year

Shenzhen Konka Group Ltd, one of the leading mobile phone makers in China, saw its mobile phone sales slow last year.


But the firm remained one of the better-performing domestic handset makers given the incredibly competitive market.


According to Liu Fengxi, assistant general manager of Konka's mobile phone division, the firm sold about 5 million mobile phones in 2004, up over the previous year's figure of 4.8 million.


However, this rate paled in comparison to the atmospheric rise the company saw from 2002 to 2003, where sales grew 330 percent.


Yet, last year's performance is satisfactory given the intense competitions in whole market, Liu said.


Konka, which is listed in both the A-and B-share markets, recorded 3.88 billion yuan (US$467.4 million) in mobile phone sales in 2003, a 128.77 percent growth year-on-year.


Liu said Konka's year-on-year revenue growth for last year was flat. He did not elaborate.


Konka's profit margin for last year was lower than that of 2003, but it remained better than many domestic rivals. And the firm sold more than 400,000 units last month, ranking it No 2 among domestic brands.


Both TCL and Amoi are now suffering losses in their mobile phone businesses.


Beijing-based SINO Market Research Ltd said few domestic makers would post a profit for 2004.


Liu said he is cautious about the prospects of the country's mobile phone market this year.


Domestic makers will have an even tougher time as foreign brands like Nokia, Motorola and Samsung aggressively cut prices and penetrate small cities and rural areas.


"I was amazed when I found Nokia had more than 40 salespeople in a very small city in Hunan Province," Liu said.


"I believe all domestic makers are cautious about their sales targets for this year."


According to Beijing-based research house Analysys International, Konka and Haier, another domestic manufacturer, managed to expand their market share while other domestic makers lost ground in the past year.


Analysys attributed it to Konka's better management of their stockpiles.


The firm was quick to catch on to the trend of color screens and did not stockpile out of date phones.


Konka will this year focus on phones with in-built digital cameras, video recorders and MP3 players, Liu said.


The firm controlled more than 30 per cent of the market for domestically-branded camera phones last year. Konka plans to launch 30 to 40 new models in 2005 including 2 and 3 megapixel camera phones, , Liu revealed.That includes up to 3 models based on the CDMA standard.


(China Daily January 20, 2005)


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