German handset maker Siemens AG and Chinese vendor Ningbo Bird Co. Ltd. announced a new strategic partnership to build and sell mobile phones in Chinese and international markets, moves that could expand both companies’ sales opportunities. Financial terms of the deal were not disclosed.
Under the new teaming, Bird will purchase basic phone components from Siemens, expanding the companies’ previous sourcing and manufacturing agreements. Siemens and Bird will jointly develop the handsets, which will be sold under the Bird brand in Chinese and international markets. Further, Siemens will greatly expand its Chinese distribution channels by selling Siemens handsets through Bird’s 30,000-shop nationwide dealer network. Siemens has previously sold phones only in developed cities in the coastal area of Eastern China.
“The partnership with Bird is part of our strategy for strengthening our position in China, the world’s largest mobile phone market,” said Rudi Lamprecht, president of Siemens’ wireless business. “We are now joining forces with Bird to enter the major growth market of smaller cities and counties. Siemens Mobile will be contributing its acknowledged technology and Bird its local consumer knowledge as well as sales and marketing strength.”
The new teaming comes just a week after Alcatel announced a joint venture handset deal with Chinese mobile-phone maker TCL Corp. Indeed, such partnerships have become a major part of the worldwide mobile-phone industry. For example, Casio Computer Co. Ltd. and Hitachi Ltd. earlier this year announced a joint venture to sell handsets in Japan and elsewhere. Chinese vendor TechFaith Holding Ltd. and Japanese technology giant NEC Corp. announced late last year their joint-venture company named STEP Technologies, which will sell 2.5- and third-generation handsets in China. NEC also announced a teaming in 2002 with Matsushita Communication Industrial Co. Ltd. and Huawei Technologies Co. Ltd. to form a joint-venture company called Cosmobic Technology Co. Ltd. to develop 3G handsets in China. Also in China, Qiao Xing Universal Telephone Inc.’s mobile-phone division, CEC Telecom, earlier this year announced a joint venture with Taiwanese mobile-phone vendor BenQ to build mobile phones for the Chinese market. Chinese phone vendor Ningbo Bird recently formed a joint venture with Sagem Mobile to develop phone components for China and elsewhere. In Japan, Fujitsu announced a joint venture with Mitsubishi Electric Corp. to build 3G FOMA phones for NTT DoCoMo Inc. Finally, Audiovox Corp. is considering selling its mobile-phone business to South Korean phone vendor Curitel Communications Inc. Ningbo Bird was not immediately available to comment on whether its new partnership with Siemens will affect its joint venture with Sagem Mobile.
Such business moves follow in the footsteps of the industry’s biggest joint venture to date: Sony Ericsson Mobile Communications. Formed in 2001, the partnership was a combination of L.M. Ericsson’s phone business and wireless technologies with Sony Corp.’s electronics and marketing expertise. Although it suffered losses during its first several years, the joint venture recently managed a turnaround and has scored profits for the past three quarters. Sony Ericsson earned the industry’s No. 5 market-share slot in the first quarter.
That much of the current flurry of joint ventures centers on the Chinese market comes as no surprise. With more than 280 million mobile subscribers, China is the world’s largest and most hotly contested mobile communication market. According to Siemens, there will be some 435 million mobile customers in China by the year 2008. And though Motorola Inc. and Nokia Corp. have largely controlled the market in the past, Chinese incumbents have recently scored significant gains in market share.
Siemens’ new deal with Bird builds on prior work between the two companies. Bird has previously purchased wireless modules from Siemens to use in its own mobile phones and has served as a contract manufacturer for Siemens handsets.
