Japan mobile handset makers to double China output

TOKYO: Amid a slowdown in the global handset market, major Japanese mobile

handset makers on Friday said they would double production in China where mobile

phone penetration is low and growth potential high. Another incentive for

Japanese firms to manufacture in China are the 100 per cent tariffs on mobile

phone imports that Beijing slapped on Japanese imports last month as part of a

festering trade dispute.

Japan's largest mobile handset maker, Matsushita Communication Industrial,

said it plans to produce two million handsets in China this year, doubling from

one million last year. The handsets will be manufactured at its Beijing plant.

Mitsubishi Electric Corp will boost output in China to 1.2 million this year, up

from 500,000 last year. The handsets are made at a joint venture plant in

southern Zhejiang province set up in 1993. The plant is capitalized at $5

million.

Mitsubishi said the facility would boost its capital base to $8 million, 60

per cent of which will be held by Mitsubishi. Mitsubishi plans to ship 28.2

million handsets in the business year 2001/02.Of this nearly 19.7 million are

expected to be sold, overseas.

Other handset makers eye China



Other handheld makers are not too far behind. Toshiba Corp hopes to enter
the Chinese market and said it has applied to the Chinese government to set up a

plant, although a company spokeswoman said it was unclear how long the process

would take.

However, Toshiba has said it wants to transform a research venture in the

central city of Nanjing into a manufacturing operation, and could build a plant

as early as next spring. Toshiba aims to sell 10 million handsets this year

worldwide, of which 5.7 million will be sold outside Japan. NEC Corp would boost

annual output to one million at its joint venture in Wuhan in central Hubei

province, the Nihon Keizai Shimbun newspaper said. It gave no details of current

production and NEC was unavailable to comment.

The number of cellphone users in China has grown to more than 100 million,

about seven percent of its population. Societe Generale Securities expects the

penetration to rise to 10 percent by the end of this year. However, the tariffs

have hurt a few manufacturers, including Kyocera Corp and Sanyo Electric CO,

which export to China, the Nihon Keizai said.

(C) Reuters Limited 2001.