The sun can never set on a day before some large multinational company says that its future is in China. Why should Nokia (NOK) be an exception?
Nokia management opines that, even though 600 million Chinese have cellphone, that the figure could rise sharply in the next few years.
According to The Wall Street Journal, the NOK CEO said "I think there’s a lot of room left when it comes to penetration."
Nokia’s projections may be right, but it faces at least a couple of obstacles. The first is that rivals Samsung, Motorola (MOT), LG, and Sony Ericsson all want a piece of the action. Nokia has 40% of the Chinese market. Increasing that number may be hard.
The second, more frightening problem is that the Chinese have a way of building their own products so that foreign companies do not own their market. That is already happening in the car business and in some sectors of consumer electronics. A large number of the handsets sold by the incumbents are made in China. Why shouldn’t China have some of that manufacturing capacity go to local companies?
China may be a large forest, but the government makes certain it is full of traps.Nokia may learn the hard way that, on the mainland, not all corporations are created equal.
Douglas A. McIntyre
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