Blackberry faces local players, rules in China

By Sophie Taylor and Sheena Lee - Analysis

SHANGHAI/TAIPEI (Reuters) - Even before its official launch in China, Research In Motion's (RIM.TO) BlackBerry faces daunting challenges from low-cost rivals and a thicket of regulations that could trip up its advance into the world's largest mobile market.

As the Waterloo, Ontario-based RIM (RIMM.O) seeks to satisfy Beijing that its handsets pose no security threat to China's communications networks, other homegrown competitors -- including a cleverly nicknamed "RedBerry" -- are making headway.

RIM, whose share price has more than tripled over the last year, has partnered with China Mobile (0941.HK), the world's largest cellular operator, but will have to play catchup with the popular local "RedBerry" service run by China's number-two mobile operator, China Unicom (0762.HK).

"Chinese businessmen are not that international yet, so they are not as familiar yet with the Blackberry and prefer local gadgets," said Rock Yang, principal handsets analyst at Beijing-based BDA.

"Price will be the deciding factor in determining how the BlackBerry expands in China," he added.

The BlackBerry is available on about 300 networks in 120 countries. Having launched in Japan, South Korea, India and Taiwan, the BlackBerry's last major Asian frontier is China.

Though China Mobile has launched SIM cards for the BlackBerry, the actual handset is not yet available, RIM has said.

Media reports said in July that RIM had received approval from Chinese regulators to begin shipping its devices, which helped popularize wireless e-mailing, to the mainland through the parent of Hong Kong-listed China Mobile (0941.HK) (CHL.N).

Besides the RedBerry -- whose official name is "Cai E" -- Chinese subscribers can also take their pick from several low-cost mobile email services from a range of providers, including Leadtone Wireless and UFIDA Software (600588.SS).

As RIM tries to push the BlackBerry beyond its traditional high-end corporate niche, it will have to decide whether to sacrifice high per-user revenues to woo Chinese retail consumers.

China also boasts hundreds of grey market firms that make clones of popular branded phones for a fraction of the originals' price, which will be a key challenge for RIM as it makes most of its revenue through handset sales.

While a BlackBerry handset is as yet not officially available for sale in China, a knock-off can already be bought online for as little as 270 yuan ($36).

BERRY FIGHT

There is also a gaping difference in cost of mobile email services in China.

China Mobile charges corporate customers a service fee of 598 yuan a month for 400 megabytes of mailbox space.