Motorola sees China growth after 66% jump

Godwin Chellam

SHANGHAI: Motorola's sales in China, the world's biggest telecoms market, are set to rise this year after surging by two thirds in 2004 on strong mobile phone revenues, its top executive in the country said.

Daniel Shih, the firm's president for China, told Reuters that revenues last year -- including internal sales and exports, which also jumped by 67 percent for the year -- had leapt to $7.7 billion.

Those revenues drove a quarter of the firm's global turnover of about $31 billion, according to Reuters Research.

They were helped by its near-doubling in Chinese phone sales, its largest market after the United States, he said. China has more than 300 million mobile phone users.

The company, which lags market leader Nokia, saw its sales in China drop 15 percent in 2003 -- the first decline since Motorola entered China 18 years ago.

To drive further expansion in China, the U.S. giant would focus on providing digital trunking, automotive control systems and broadband services this year.

"All of our units in China did very well last year. Mobile phone sales almost doubled, while network demand also grew very fast," Shih told Reuters in an interview.

"We're confident of growth this year, although competition remains very fierce."

Shih, who became president at the end of 2003, declined to provide specific forecasts for 2005.

"We will continue to focus on mobile phones this year," the former General Electric executive said.

MARGIN-SAPPING COMPETITION

Motorola's mobile phone sales in China surged in 2004 after the U.S. giant more than doubled its offerings to 42 models, led by its high-end Razr V3.

Analysts estimate Motorola has about 15 percent of China's mobile phone market, trailing rival Nokia's 19 to 22 percent share.

Margin-sapping competition from Chinese makers, which emerged from nowhere in the late 1990s to grab about half of the booming market, have forced foreign players to scramble.

Samsung Electronics Co. Ltd. and Siemens AG are some of the foreign brands slugging it out with domestic rivals Ningbo Bird Co. Ltd. and TCL Communication Technology Holdings Ltd., an arm of China's biggest TV and cellphone maker, TCL Corp.

Japanese brokerage Nomura forecasts handset sales in China, including new purchases and replacement demand, to grow to 105 million units this year from an estimated 90 million in 2004.

Motorola has previously announced a 10-10-10 strategy for China: $10 billion for accumulative investments by 2006, $10 billion for annual production values by 2006 and $10 billion for local sourcing in the next 5 years.

(Additional reporting by David Lin)