LG Puts Toe Into Chinas 3G Market but...
By Kim Yoo-chul
Staff Reporter
LG Electronics hopes to take a lead in the highly competitive 3G-enabled mobile phone market in China by striking up partnerships with China's leading mobile carriers.
Such strategic tie-ups are forecast to partly remove "chronic worries" over LG's weaker distribution and sales channels, giving more room for the world's third-biggest handset vendor to take a bigger slice in the rapidly growing 3G phone market there.
Market watchers and industry officials say LG's successful bid to supply handsets for the new 3G mobile services provided by China's three major carriers ― China Telecom, China Mobile and China Unicom ― reflects the increased brand image of the company's key products.
Despite such vigorous efforts, it seems highly unlikely that LG will be able to better compete with its cross-town rival Samsung Electronics anytime soon ― its weaker distribution channels and promotions have been cited as heavy drawbacks.
LG is set to invest one billion yuan or some $150 million in China this year to expand its handset outlets and promote its products, according to company executives.
On Tuesday, the company clarified it aims to launch a total of 60 new phones in China. More than 40 percent are 3G-enabled, including models with high-speed Internet access, touch screens and QWERTY keyboards.
"LG will supply 33 percent of 3G handsets provided by China Telecom in 2009," spokesman Park Seung-koo said.
Since mid-April, China Telecom has been offering CDMA-based 3G telephony services across China ― the world's biggest handset market.
The third-generation mobile service will allow users to enjoy video telephony and other multimedia features through faster and more seamless connectivity.
"The bidding is literally good for LG. But a key issue is how LG will attract China's leading carriers and consumers continuously with more measures," an analyst at Prudential Investment said.
The situation is not favorable for LG in China's promising 3G-enabled mobile phone market. The demand for such high-end phones is steadily rising and competition is very intense.
"The demand for high-end smart phones won't be greatly influenced by the (financial) crisis in China, especially in the 3G sector," Gartner, a U.S.-based IT consulting firm, said.
Nokia leads the Chinese handset market, followed by Samsung Electronics, with 39.9 percent and 22.7 percent, respectively, as of the end of February, according to the data from GfK, another market research firm.
Mobile phone makers, including those at home and abroad, are trying to grab a larger share of the lucrative Chinese 3G market by various means such as partnerships with telecom operators.
Apple and Acer will also launch in the domestic smart phone market ― Apple is negotiating with China Unicom on the debut of the 3G iPhone in China.
"Many mobile phone makers are boosting capital injections into 3G R&D as well as mobile phone promotions, hoping to enlarge their foothold in the nascent 3G telecom market," Kim Un-ho, an analyst at Prudential, said.