Li Xiaolong, marketing director from the Chinese home appliance manufacturer Aux, says that at least one-quarter of the domestic mobile phone manufacturers will go bankrupt and there will only be about 15 manufacturers left by the end of this year.

To prepare for this situation, Aux will set up a second mobile phone production base in Shenzhen, which will consist of a research institute and a factory, and it is expected to yield 5 million mobile phones each year. The new production base will start operations in July.

Apart from announcing the establishment of the new production base, Aux has also released over ten types of new mobile phones. Li says this shows the company's ambition in seeking an advantageous position in China's mobile phone industry.

The latest statistics from the Ministry of Information Industry (MII) show that by the end of May 2006 the number of telephone users in China had exceeded 780 million, of which more than 363 million were fixed phone users and over 420 million were mobile phone users.

The statistics reveal that China's mobile phone users grew more rapidly than fixed phone users, increasing by an average of 5.48 million per month, which made the total mobile phone user population 12.9 million more than the end of last year.