Finnish mobile phone maker Nokia has announced that during the second quarter of 2011, the company's shipments in China decreased by over 50% compared with the previous quarter and its operating losses reached EUR487 million.

Nokia has recently published its financial report for the second quarter of 2011, stating that its performance in China and Europe saw significant decline and the company lost EUR487 million during the reporting period.

Nokia admitted in a conference call that its competitive environment and product sales faced challenges in China and Europe, and the competition in the smartphone sector was most severe. The company said its shipments in China decreased by 52% quarter-over-quarter in the second quarter of 2011 and the European market also saw a decrease of 30%. Due to the poor performance in these two markets, Nokia's global sales of mobile phone decreased by 20% year-over-year.

Stephen Elop, president and chief executive officer of Nokia, said that Nokia's many products do not have price advantages and the situation was caused by many reasons, including inventory cycle, costs, and inadequate supply expectations.

To change the unfavorable situation, Nokia started adjustments to its inventory structure in the first quarter of 2011. In addition, it has assigned its global sales director Colin Giles to temporarily lead the Chinese business. Nokia also plans to further decrease the prices of its smartphones from the third quarter of 2011.

In the first half of 2011, Nokia launched its annual flagship mobile phone N9 based on the MeeGo operating system, aiming to compete with Apple's iPhone in the high-end smartphone market. The company said it plans to launch ten smartphone products based on the Symbian system in the next 12 months.