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China suppliers of mobile phones shifting to upscale models

HONG KONG — China suppliers of mobile phones are moving upmarket to meet demand for products with more functionality and greater visual appeal. This is according to Global Sources’ (Nasdaq: GSOL) China Sourcing Report: Mobile Phones. The report, which covers smart, TV, touchscreen, 3G and feature phones and handsets based on wireless communication technologies such as GSM, shows China suppliers are placing increased emphasis on innovation. Features-rich models are driving R&D, as suppliers strive to gain a competitive advantage.

Publisher of the Report, Livia Yip, said: “China remains the world's largest production center for mobile phones, accounting for half of global supply. Encouraged by 21 percent export growth in the first half of 2010, suppliers anticipate whole-year overseas shipments reaching 550 million to 600 million handsets.

“To broaden their market reach and achieve better margins, China export manufacturers are shifting away from low-end models to advanced designs. Upscale models now produced in China feature 3G, dual-SIM GSM, multimedia capability, GPS, Bluetooth, Wi-Fi, megapixel cameras, A/V recording, larger storage capacity, TVs and touchscreens.”

Besides integrating more functions, suppliers are also innovating their housing designs for differentiation in this highly competitive industry.

Prices fall even as product features expand
According to the Report, many suppliers have reduced product prices in the past three months, despite adding value with feature enhancements. In fact, nearly half of companies see price competition as their biggest challenge right now.

Yip said: “Even though suppliers face the possibility of higher production expenses due to ongoing labor and IC shortages, prices are unlikely to rise significantly in the coming months, as suppliers fear losing orders amid intense competition.”

Of suppliers surveyed for the Report, 61% recently decreased prices. About one-fifth of respondents dropped prices by more than 15 percent, while 43 percent of companies said their reductions were less than 5%.

Other trends revealed by China Sourcing Report: Mobile Phones include:

— 57% of surveyed suppliers plan to improve operating efficiency to strengthen export capability

— Reduction of production costs and product defects are also key strategies

— 44% of suppliers are focusing R&D on more affordable solutions

— Suppliers see design piracy, the yuan/US dollar exchange, raw material costs and stricter overseas standards as challenges

Supplier profiles, price forecasts and the latest mobile phones for export
The 109-page China Sourcing Report: Mobile Phones provides detailed profiles of 26 suppliers with verified manufacturing and export credentials, plus contact details of 25 more suppliers. It also includes a Product Gallery featuring 115 of the most popular export models, with key specifications and full-color pictures.

China Sourcing Report: Mobile Phones is available for purchase at China Sourcing.

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