China's Mobile Phone Market: Market barriers for Japanese vendors

China's Mobile Phone Market: Market barriers for Japanese vendors

Whitepaper analyzes reasons for failures of Japanese mobile phone vendors in China and provides data on their China distribution systems.
China's mobile phone market is one of the most promising and fastest growing in the world, but Japanese handset makers have been largely shut-out of it. In 2005 and 2006 alone, four major Japanese mobile phone brands exited the China market. This white paper discusses the challenges facing mobile phone vendors in China's competitive market and reviews the market strategies, successes, and failures of major Japanese companies NEC, Toshiba, Mitsubishi, Panasonic, and Sony Ericsson. It also includes an appendix with data and tables detailing sales by distributor and type of sales channel for Toshiba, Mitsubishi, and Panasonic in 2004 and 2005.

Trouble in the World’s Fastest Growing Market 3

Unique Market 3
Table 1. Top 3 Mobile Phone Brands in China vs. Japanese brands, (2004, 2005 units sold) 4

Market Mistakes 4

Misunderstood Failure 6

NEC 6
Table 2. Table: NEC China Handset Sales, 2001-2006 (predominantly GSM models) 8

Toshiba 8
Table 3. Toshiba China Handset Sales, 2001-2006 (predominantly CDMA models) 9

Mitsubishi 10
Table 4. Mitsubishi China Handset Sales, 2001-2005 (predominantly GSM models) 11

Panasonic 11
Table 5. Panasonic China Handset Sales, 2001-2006 (predominantly GSM models) 12

Sony Ericsson 13

Conclusions 14

Appendix: Mitsubishi, Panasonic, and Toshiba China Distribution Systems 15

Table 6. 2004 China Handset Sales (units: 10,000), by nation-wide distributor 15
Table 7. 2004 Home Appliance Sales, by distributor (units: 10,000) 15
Table 8. 2004 Handset Retail Chain Sales (units: 10,000): 16
Table 9. 2004 Regional channels (units 10,000): 16
Table 10. 2004 Revenue from nation-wide distributors (unit: RMB 10,000 Yuan): 16
Table 11. 2004 Revenue from home appliances 17
Table 12. 2004 Revenue from Handset Retail Chains 17
Table 13. 2004 Revenue from Regional channels 17
Table 14. 2005 Sales by Nation-wide Distributor (unit: 10000) 18
Table 15. 2005 Sales by Home Appliance Chain 18
Table 16. 2005 Sales by Handset Retail Chain 18
Table 17. 2005 Sales by Regional Channels 19
Table 18. 2005 Revenue by Nation-wide distributor (unit: RMB 10000 Yuan): 19
Table 19. 2005 Revenue by Home Appliance Retailer 20
Table 20. 2005 Revenue by Handset Retail Chain 20
Table 21. 2005 Revenue by Regional Channel 20
Table 22. Weaknesses of Distribution Systems and Contribution to Market Failure 21