Nokia Corp. (NOK), the largest mobile phone manufacturer of the world, is gradually losing its market share in China, the largest emerging market of the world. This country generates around 16% of Nokia’s total sales.
In 2009, Nokia’s revenue from China was $8.6 billion, remaining flat year-over-year. However, its market share in China reduced to 35% in 2009 compared to 40% in 2008.
Recently, Nokia received more than $2 billion of mobile handset shipment order from two Chinese distributors together. Nokia usually announces such deals in China once a year. China PTAC and Telling Telecommunications Holdings each generated more than $1 billion of orders.
The important fact is that the value of the deal fell for the third straight year. In 2008, order value from China PTAC alone was $2 billion, in 2009 it was $1.76 billion and in 2010 the deal size reduces to a little over $1 billion.
In China, Nokia is quickly losing market share to Research In Motion’s (RIMM) BlackBerry and Apple Inc’s (AAPL) iPhone in the high-end smartphone segment. Similarly, in the low-to-mid range handset segment, the company is facing increasing competitive pressure from Samsung Electronics, Motorola Inc. (MOT), and other low-cost Chinese manufacturers.
Losing market share in China may be very costly for Nokia’s future growth. With respect to wireless subscriber base, China constitutes the largest market in the world with around 750 million of mobile subscribers. This figure may go up to 1.22 billion by 2014. Massive implementation of home-grown 3G (TDS-CDMA) network technology has made this country a lucrative opportunity for any and all mobile phone developers.
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