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 Overdrive
The top 10 models in China's booming car industry
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| Easy Cell: The mainland market is big, but Bird aims for more |
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Posted Monday, November 17, 2003; 21:00 HKT
To get an idea of what's in store for the global economy when China, the workshop of the world, pulls double shifts, travel to Fenghua, a spartan town 15 kilometers outside the eastern coastal city of Ningbo. There, Ningbo Bird, a manufacturer of mobile phones, has sprung from obscurity to challenge much larger foreign competitors such as Nokia and Motorola in a bruising battle for mainland market share. According to some estimates, Bird sells more cell phones in China than anybody else, producing revenues of approximately $1.2 billion this year. But company president and founder Xu Lihua knows he can't keep growing the top line at double-digit rates by staying at home. He's bent on spreading his fetching little flip phones throughout Asia, and ultimately the world. "I have a dream that we will be as big as Motorola, IBM or Microsoft," Xu says.
That dream is far from reality at the moment. Few Chinese companies have been able to leverage success in their homeland into an international brand. But outfits like Bird are rapidly catching up to the rest of the world in terms of manufacturing sophistication, and it seems only a matter of time before they acquire the requisite management and marketing skills to compete globally, too. In China's increasingly crowded consumer markets, mainland companies are being forced to export or die. China's largest white-goods maker, Haier, is already selling refrigerators in Wal-Mart stores in the U.S. This month, France's Thomson announced a joint venture with China's TCL that will become the world's largest TV manufacturer; it will be run not by the old French firm but by TCL managers.
Xu and three colleagues founded Bird as a pager maker in 1992, and he built it into a major company by catering to mainlanders' taste for cell phones with flashy color displays and clamshell cases. Last January he opened two factories that can churn out 18 million phones a year—more than even China, the largest cell-phone market globally with more than 250 million users, can absorb. The country has 37 foreign and domestic manufacturers with the capacity to produce twice the number of phones currently sold annually. Inventories quadrupled in the first half of 2003 to 20 million, while prices fell by 20%, according to research firm IDC. The firm predicts that sales of new mobile phones in China will decline 2% next year as most mainlanders who can afford a phone already have one. Yet more companies are crowding in. Huawei Technologies, China's largest telecom-equipment maker, announced last week that it is also launching its own cell phones on the mainland.
With its profit margins under pressure and foreign firms staging a counterattack, Nokia plans to break with its traditional designs and offer its first clamshell-style phone, while Motorola now sells a model aimed at youngsters, with colored disco lights that flash in patterns when the phone rings. Bird, though profitable, has nowhere to go but overseas. In September, Bird launched three models in India, one of the world's fastest-growing markets. Bird phones are also sold in Malaysia, Hong Kong and Russia.
Xu says Bird's strategy is simple: "I want to sell at the lowest price." But the advantage of local know-how that helped make the company a top producer in China is of little value overseas, and Bird managers admit that they're just starting to understand how to overcome the mainland's reputation for shoddy goods and build an international brand. Still, Xu says, "What Chinese manufacturers can do, foreign companies can't do"—and that's to build cheap, sexy cell phones. The phone wars have only just begun.
With reporting by Bu Hua/Shanghai and Kaiser Kuo/Beijing
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