China Telecom Cuts CDMA Handset Subsidies
21st Century Business Herald, 7/07/09
Multiple sources have reported that China Telecom recently began making significant cuts to some of its CDMA handset subsidies. On July 5, Li Wang, executive vice president of handset manufacturer Yulong (the owner of the Coolpad brand), confirmed: "China Telecom started reducing subsidies in certain provinces and municipalities in April." Li, however, refused to divulge any further details. Chinese smartphone manufacturer Qigi Future Technology VP Rao Xiaobo said "subsidies in some areas will be reduced by nearly half, as well as in areas that only subsidize low-end CDMA handsets of RMB 400 or less."
The changes leave CDMA manufacturers in markets that are highly dependent on subsidies in a serious predicament. Rao Xiaobo said "in nearly two months, more than a few CDMA manufacturers have had their sales volume drop by over 50%." Journalists in Shenzhen discovered that for many small and medium-sized CDMA handset manufacturers, orders have come to a standstill. In the case of Tianyu Communication Equipment, VP Xiao Zhaojun said that in Q1 2009, monthly average sales volume of the company's K-Touch brand handsets was nearly 500,000 units. By April it had dropped to "not even 200,000" - a drop of more than 50%, and while it has crept back up in May and June, it has not returned to Q1 2009 levels.
Keywords: Rao Xiaobo Xiao Zhaojun CDMA Coolpad K-Touch Li Wang Qigi sales volume smartphone Tianyu wireless Yulong subsidy handset vendor 0728.HK CHA mobile phone mobile phone vendor
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