TOKYO (Reuters) - Sharp Corp (6753.T) will start selling cell phones in China ahead of the Beijing Olympics, targeting the high-end market in the rapidly growing economy.
With the move, Sharp, the largest supplier for the domestic market, will be the only Japanese firm selling handsets in China after Kyocera Corp (6971.T) withdraws this month, hurt by competition from lower-priced phones made by companies such as Nokia NOK1V.HE and Samsung Electronics Co Ltd (005930.KS).
Soichiro Monji, chief strategist of the equity management department at Daiwa SB Investments, said the path to survival for Japanese cell phone suppliers was either compete overseas or withdraw altogether in light of the maturing domestic market.
“It (Sharp) is headed in the right direction, but whether it will succeed still carries a question mark,” he said.
“We’ll need to keep watching how the company will fare in China as no other Japanese maker, except for Sony, has succeeded in the mobile business abroad.”
China’s cell phone market was dominated by Nokia, followed by Samsung and Motorola Inc MOT.N in the fourth quarter of 2007, according to data from Analysys International. Together, the three companies accounted for more than a 60 percent share, it said.
“There is a growing number of consumers in China who want to buy high-tech handsets, such as those equipped with cameras almost as good as digital cameras, even if they are expensive,” Sharp spokeswoman Miyuki Nakayama said on Friday.
“People want a nice screen especially for the Olympics.”
Sharp is known for its strength in high-tech mobile phone parts such as small to mid-sized liquid crystal display (LCD) panels and small cameras.
Sales may start from around June, Nakayama said.
Many Japanese cell phone makers have quit oversea markets and withdrawn to the domestic market in recent years in the face of tough competition from Nokia and other global suppliers that enjoy greater economies of scale.
On the domestic front, Mitsubishi Electric Corp (6503.T) has said it will exit the market due to tough competition, while Sanyo Electric Co Ltd 6764.T said in January it would sell its money-losing cell phone business to Kyocera.
Separately, Sharp said it aims for a global market share of 30 percent in LCD TV panels in 2010 or 2011, when a new plant will be at full production capacity.
Sharp currently ranks the fifth with a 12.4 percent share in that market, which is led by Samsung, according to data from DisplaySearch.
Shares of Sharp ended the day down 0.2 percent at 1,734 yen, outperforming a 1.5 percent fall in the benchmark Nikkei average .N225.
Additional reporting by Mayumi Negishi and Kiyoshi Takenaka in Tokyo and Sophie Taylor in Shanghai; Editing by Michael Watson