China's National Development and Reform Commission recently approved five new companies to invest in mobile phone production, an official with the commission said Thursday.

The companies -- Shenzhen Huawei, Qingdao Hisense, Dalian Daxian Pantech, Ningbo Aux and Jiangsu Gaotong -- will have a combined annual production capacity of 11 million handsets.

"This is the first batch of companies to get licenses under the new rules introduced last month to standardize the process for approving investment in mobile phone equipment manufacturing," the official said.

China turned out 230 million mobile phones last year, the most in the world. According to the Ministry of Information Industry's goal for 2005, the country is expected to make 260 million mobile phones in 2005.

The commission urged mobile phone producers to improve their research and development capacity to deal with the fierce competition in the mobile phone manufacturing industry.