Gadgets & Electronics

End Of Profit Growth For Mobile Phone Manufacturers?

Amoi's 2004 annual report, released last week, shows the company's net profit dropped by 97.31% compared with the previous year. The mobile phone manufacturer's stock price also declined from CNY17 at the beginning of 2004 to its current price of less than CNY4.

Amoi concluded in its report that the high-profit times for Chinese mobile phone manufacturers has now gone.

For Amoi, it says the dramatic drop of profit has been caused by the company's huge investment in 3G mobile phone development. Yet the company says its loss was not as serious when compared with that of its competitors.

Experts quoted in the Chinese media say that the root reason for the business decline in China's mobile phone industry has much to do with the high risk channel policies adopted by Chinese mobile phone manufacturers. The majority of them provide "total price protection" to their dealers. So under the pressure from foreign manufacturers and without sufficient technology support, mobile phone manufacturers often have to undertake the financial burden resulting from any price war.

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