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The world's top mobile phone maker Nokia will continue to take an aggressive approach towards China's CDMA handset market, a company executive said.

 

The reiteration comes after Nokia announced it would spin off its CDMA (code division multiple access) mobile phone division to form a 50-50 joint venture with Japan's Sanyo Electric.

 

The decision has sparked some speculation that Nokia is to pull out of the CDMA mobile phone market.

 

But the tie-up with Sanyo represents Nokia's reinforced commitment to the CDMA market, especially in China, which has one of the world's largest CDMA mobile phone networks, said Larry Paulson, vice president of product marketing at Nokia's CDMA business unit.

 

Nokia will increase its efforts in tapping into China's CDMA market, as the firms' combined strength will place it at an advantage, he said.

 

The number of people working on CDMA innovations at Nokia's research and development (R&D) centers will more than double to nearly 3,000 once the joint venture becomes operational later this year.

 

The increased R&D capabilities will help Nokia, which currently focuses on low-end and mid-range CDMA phones, fix some loopholes in its portfolio.

 

Sanyo mainly produces high-end CDMA mobile phones.

 

Under a preliminary deal, both Nokia and Sanyo's CDMA businesses, including those in China, will be incorporated into the joint venture, which will be independent from both companies.

 

Colin Giles, Nokia's senior vice president for customer and marketing operations in Greater China, believed the tie-up will help Nokia obtain the No 1 position in China's CDMA market.

 

"We are truly confident that we are in a stronger position to grab a bigger (CDMA) market share, as we have already launched a lot of CDMA phones and established infrastructure facilities, such as R&D capabilities and distribution channels in China," he said.

 

Nokia is now the top mobile phone maker in China, including Hong Kong and Taiwan, with more than 30 percent market share.

 

Yet, its performance in the CDMA market in China is outshone by its GSM (global systems for mobile communications) mobile phone business.

 

The Finnish firm obtained a license to make and sell CDMA phones in China in June 2003.

 

Nokia was the "only mainstream company which maintained growth in China's CDMA mobile phone market last year," Giles said, without giving details.

 

According to retail data tracking firm GFK China, sales of CDMA handsets in China dropped by 27 percent to 6.1 million units last year, while the GSM mobile phone market surged by 32 percent to 79 million units.

 

Pang Jun, an analyst with GFK China, said there were uncertainties in China's CDMA market, such as continuous policy shifts by China Unicom, which operates the CDMA network.

 

"That will be a big challenge for manufacturers such as Nokia," the analyst said.

 

According to the Ministry of Information Industry (MII), the number of mobile phone subscribers in China exceeded 400 million by January.

 

Subscribers to China Unicom Ltd's CDMA service stood at only 33.04 million by January.

 

(China Daily March 14, 2006)