Why the Chinese Love Nokia

This morning Nokia (NOK) issued a release that China Postel Mobile Communications Co, Ltd. would purchase mobile devices worth roughly $2.5 Billion (US Dollars) in 2007.  This is the largest cell phone distributor in China and its market share was said to be over 30% in 2006.  The companies have been working together since 1998 and China Postel has distributed more than 37 million from Nokia since that time.

Nokia’s market cap is $97 Billion in equivalent, but its dollar adjusted revenues appear to be some $54 Billion in 2006.  Nokia has so far been successful in its fight against Qualcomm (QCOM) over CDMA royalties, and this fight is helping it further in being a lower-cost provider.  China is an enormous opportunity and it is already one of the top consumer markets for items like this.  But there is still price sensitivity for 90% of the country, and Nokia is that answer.  Nokia might not be the only game in town but it shows that price and relationships can win the day.  This would represent close to 5% of the company’s entire revenue for the year.  If that isn’t proof that the Chinese market loves Nokia then what is?

Jon C. Ogg
May 11, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.