ABOUT one-third of manufacturer-distributors of knockoff mobile phones in Huaqiangbei have moved out of the commercial area in the past few months due to increasingly fierce competition.
Chinese-language media reported the moveout quoting a senior official with the city s mobile telecom association.
Wang Ruijin, secretary general of the association, said many manufacturers were forced into other electronic business while others simply closed down in the face of tightening government regulations on intellectual property protection and fierce competition.
A business insider, who refused to be named, said businesses in many buildings in Huaqiangbei used to be so busy that it sometimes took more than 10 minutes to wait for an elevator. But the elevator now goes straight to the floor you want to go because there are few buyers, he said.
It was estimated that there were about 3,000 manufacturers of unbranded and unlicensed mobile phones in the Huaqiangbei area. According to figures from the industry association, about 228 million of these mobile phones were sold in 2010, up 43.6 percent from the previous year. Growth was expected to slow to less than 12 percent this year.
It was said that the knockoff mobile phone business would enter a downturn from 2012. The downturn is mainly due to costs and the unfavorable policy environment, said a report produced by market research institute iSuppli.
The report said manufacturers were facing increasing competition from branded mobile phones such as Nokia and Samsung because the prices were lower. But prices were no longer the only consideration for consumers, the report said.
Phone buyers have higher requirements for the products, said a manufacturer who has been in the business for years. He gave only his family name Zhu.
He said profit was very low now. We used to count on quantity for profit, said Zhu, who sold more than 100,000 handsets a month last year, but now sells no more than 30,000 phones per month.
He said a growing number of buyers have shifted to branded phones. To my knowledge, about 300 registered new brands of mobile phones have emerged in the local market since last year.
Zhu said unbranded mobile phone makers have to release at least one new model every month to maintain their market share. It cost more than 1 million yuan (US$151,516) to invest in a new model, which will lead to bankruptcy if it doesn t sell well, he said.
The high risk has forced many people out of the business. The knockoff mobile phone industry is undergoing a restructuring, said Pan Jiutang, a director of the research center of the city s semiconductor association.
Pan said the intense market competition will phase out a number of manufacturers while some with strong R&D ability will grow bigger. Keewood was a regular manufacturer of knockoff phones in Huaqiangbei but now it has grown into a known brand, said Yang Qun, a mobile phone analyst.
Yang said Keewood has exported more than 4 million handsets abroad last year, becoming one of the top 10 mobile exporters in the world. (SD News)
