Chinese Handset Manufacturers Gain Ground in Europe

Strategic Insights -

Huawei and other Chinese handset manufacturers are making inroads in Europe, particularly in the market for third-generation (3G) handsets. Under pressure in their home market, they are benefiting from foreign operators' commitment to volume orders and from tailoring their products to meet specific European requirements. Analysts say Chinese vendors need to improve their design capabilities to compete with established players in mature European markets.

Key Takeaways:

  • Huawei and ZTE are making significant inroads in Europe with Vodafone, Orange, and other multinational mobile carriers, producing handsets with specifications and applications embedded.
  • Chinese vendors are benefiting from foreign operators' commitment to volume orders, allowing them to reduce prices and increase competitiveness.
  • Huawei's WCDMA consumer handsets for Vodafone could be 30% cheaper than similar handsets made elsewhere, according to Vodafone's group director of terminals, Jens Schulte-Bockum.
  • Affordable handsets will help popularize the use of 3G phones, offering faster downloads for video and other data.
  • Vodafone is moving its handset procurement operations to Hong Kong to tap into the mainland vendors' market, recognizing China's stronger potential as a supplier.
  • By next year, Vodafone plans to have up to 10 consumer and business handset models made by Chinese or Taiwanese ODM companies, representing up to 5% of all handsets sold.
  • Huawei had $1.5 billion revenue from handset sales this year with 28 million units shipped, said Guo Ping, head of the company's terminal business.
  • Nokia led the mainland Chinese market in the second quarter with a 23% share, followed by Motorola with 21% and Samsung with 8%.

Statistics:

  • Huawei's WCDMA consumer handsets for Vodafone could be 30% cheaper than similar handsets made elsewhere.
  • By next year, Vodafone will have up to 10 consumer and business handset models made by Chinese or Taiwanese ODM companies.
  • Vodafone plans to have up to 5% of all handsets sold made by ODM companies next year.
  • Huawei had $1.5 billion revenue from handset sales this year with 28 million units shipped.

Sources:

  • Gartner analyst Ann Liang
  • Huawei
  • Vodafone group director of terminals, Jens Schulte-Bockum
  • High Tech Computer Corp
  • GT System International