In sharp contrast with the country's soaring number of mobile subscribers, major Chinese handset makers have continued to report profit drops in the fist half of this year.

Eastcom, one of China's major handset manufacturers, made an announcement last week saying that the company may suffer a profit loss of 40-60 million yuan (4.82-7.23 million US dollars) in the first half of this year.

Amoi, another major Chinese mobile phone maker also made a similar warning earlier, saying that the company would suffer a big profit loss from January to July against the profit of 86.64 million yuan (10.44 million dollars) in the same period last year.

Other major handset makers in China, including TCL and Bird, are not optimistic either.

TCL reported a profit drop of 30 percent in the first three months with a profit loss of 327 million yuan (39.4 million dollars).

Pressure from both newcomers and foreign brands is believed to be the major cause of the fall, said a telecom industry expert.

Since China loosened its control over the licensing of mobile phone manufacturing, nine new companies have entered the industry, posing a big threat to old brands.

Following the entry of nine new companies, the productivity of China's mobile phone industry would rise by 2.5 million annually, said government sources.

The State Development and Reform Commission warned that the productivity of home-branded handsets is already superfluous and companies who want to enter the industry should be careful in making the applications.

The third group of licenses are expected to be issued in the near future.

Strong competition from foreign rivals have also put Chinese mobile phone makers in a tough situation.

Earlier this month, the GSM Association(GSMA), an international industry group comprising operators, phone makers and developers, called for its members to produce lower than 30 US dollars per handset in a bid to promote the use of GSM in developing countries.

This is the second time that GSMA launches a low price movement. In April this year, GSM member Motorola started to sell handsets at 40 US dollars.

A market survey shows that in China around 20 percent of consumers are interested in handsets at a price lower than 1,000 yuan (120 dollars). Most home-made handsets are 500-1,000 yuan and few of their products are below 500 yuan.

As many international giants have lowered their average prices to about 300 yuan in a large quantities, Chinese mobile phone makers will have a tougher time, experts say.

Source: Xinhua