Korean handset manufacturers said recently that the export of code division multiple access mobile phones to China has been slowing down, hurt not only by sluggish sales and greater competition among foreign and Chinese manufacturers, but also because of China Unicom's recent decision to reduce investment in its CDMA service and its marketing activities.

According to market research firm GFK China, the number of Chinese mobile phone users reached 234 million as of the end of July, up 30 million from the end of December 2002. The number of CDMA mobile phone users stood at 12 million as of the end of July, up from 7.7 million at the end of last year. The growth figure translates into a net increase of 600,000 users on a monthly basis.

"The trend in China is that GSM phones are more favored by local users compared with CDMA handsets," an official of a Korean handset maker said. "China Unicom is also moving to reduce handset subsidies, which is leading to slower growth of CDMA users," he said.

In recent months, Chinese handset makers have been rapidly expanding their market share, creating a threat to the position of Korean CDMA-handset makers. Nokia, the world's largest mobile phone producer, and Motorola have intensified marketing to overtake Samsung, raising the stakes in the Chinese market.

"The combined market share of Chinese local handset makers is expected to reach 30 percent or 40 percent toward the end of this year, a prospect that will force handset makers to cut prices to retain their market share," a Samsung official said.

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