world growth

world growth

Tuesday, January 24, 2012

ZTE, Huawei gaining smartphone market share in Europe

How China Ate Android

ZTE Blade smartphone

Google is now reporting a heady 700’000 Android device activations per day. How is it possible the mid-tier Android vendors cannot eke out revenue growth with that kind of global Android unit explosion still going on?

The most likely explanation is the rapid expansion of the low-cost Android phone vendors, particularly ZTE and Huawei. In 2010, Vodafone and Orange decided to give these Chinese companies a shot at becoming mainstream vendors in Europe. The experiment was a wild success – several of the models and particularly the ZTE Blade (which Orange named “San Francisco”) became bestsellers by pushing smartphone pricing to new lows.

The current state of the UK pre-paid market reflects the sea change gripping the European smartphone market. It demonstrates why Sony and HTC are being marginalized so rapidly. The Huawei Blaze is now selling for 60 pounds without contract – and it features a 3 MP camera and a 3.2 inch display. It’s only 11 mm thick; a far cry from the chunky low-end smartphones consumers are used to.

HTC Wildfire S costs 130 pounds. Blackberry Curve 9300 costs 145 pounds. Sony Ericsson Walkman Mix costs 65 pounds; but it features a smaller display, lower pixel density and is 3 mm thicker than the Blaze. Established smartphone vendors that have been in the handset business for more than two decades cannot match the price/quality ratio that the Chinese Android vendors offer.

ZTE is now targeting 80 Million handset volume in 2012 – and 100% smartphone volume growth. ZTE Blade became the second-best selling W-CDMA phone in China last summer and is now cruising towards 10 million units sold globally. The ZTE Skate is off to an even faster start. And ZTE is actually behind Huawei in China – these two combined are likely to hit 25% share of China’s handset market by summer. By elbowing out old champs like Motorola and LG in China, Huawei and ZTE are building production scale they can leverage to undercut rivals even more aggressively in the rest of the Asia.

ZTE and Huawei are in the process of crushing the mid-tier Android competition, but they are also eyeing other device segments. ZTE’s Windows model Tania is debuting in the UK at the monthly contract rate of 10 pounds – half of what the Nokia 710 will cost.

After strong gains in Europe and China, the Chinese vendors are now going to attack the US smartphone market in 2012. Squeezed between Apple and Samsung at one end, the Chinese low-cost vendors at the other, mid-tier vendors may be about to demolished. LG, HTC, Motorola, Sony – their bad 4Q11 performances are just a prelude to a devastating 2012. It would not be surprising if Google opts to wind down Motorola’s handset operations sometime over the next two years and Sony bails out entirely.

ZTE and Huawei demonstrated in the UK market last year just how little brand loyalty consumers have when they see a white label smartphone undercutting second-tier brands by 30-60%. We are likely to witness a US sequel to this phenomenon this year. Globally, the industry could well witness smartphone ASP erosion that is substantially faster than projected.

Saturday, January 14, 2012

XAIC delivers 2,000th vertical tail to Boeing Company

A company in northwest China's Shaanxi province has hailed a major milestone in its history of aircraft component production as a sign of its leading status in the market.

Xi'an Aircraft International Corporation (XAIC), a subsidiary of China Aviation Industry Corporation (AVIC), has turned over 2,000 737NG (Next Generation) vertical tails to the Boeing Company as of Friday.

"It means that XAIC has mastered international advanced airplane components manufacture techniques and is becoming a strategic partner of aircraft enterprises known around the world," said Jiang Jianguo, XAIC president.

The 737NG vertical tails are widely used by various kinds of airplanes, such as Boeing 737-700, 737-800 and 737-900.

Currently, about two-thirds of the vertical tails of the operating Boeing 737 aircraft in the world were made by XAIC, said Jiang.

XAIC signed its first production contract, for 1,500 vertical tails, with the Boeing Company in 1996.

XAIC has become the major supplier of some renowned aircraft manufacturers, and has turned over more than 8,000 aircraft components to Airbus, Bombardier and Alenia Aeronautica.

XAIC also turned over the first 747-8 vertical tails to the Boeing Company Friday, marking a great breakthrough in production of tails for large aircraft.

In recent years, the inland province of Shaanxi has beefed up its efforts in developing its aviation industry. Shaanxi is home to one of China's leading aircraft makers, AVIC Xi'an Aircraft Industry (Group) Corp.

Wednesday, January 4, 2012

Chinese producer wins Ford's biggest order for automatic press

Chinese machine tool companies are slowly moving up the value chain.


JIER Machine Tool Group Company, a leading manufacturer of machine tools in China, has won an order from Detroit-based Ford Motor Company for five large-scale automatic press production lines at two of its factories, the company's president Zhang Zhigang announced on Dec. 29.

It is the first time in nearly 20 years that Ford Motor has bought complete sets of press equipment from a country other than Germany.

JIER will finish the turnkey project, namely delivering the five production lines to Ford Motor in a ready-to-use condition by 2013.

The U.S. automaker's order is the single largest export order that Chinese machine tool producers have ever received.

Among the five press production lines, which will reach top-grade international level, one will be installed at Ford's new factory in central United States, and it will be the factory's only press line.

The other four will be installed at the Ford River Rouge Complex in Detroit, the oldest factory of Ford Motor and a symbol of the U.S. automobile culture, to replace its existing press lines.