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China Wireless Targets Lenovo, Samsung in China Smartphone Sales

April 25 (Bloomberg) -- China Wireless Technologies Ltd., the nation’s third-largest smartphone vendor, said it will eventually overtake market leaders Samsung Electronics Co. and Lenovo Group Ltd., helped by demand for low-cost phones.

A 50 percent surge in smartphone shipments will allow China Wireless to pass Lenovo for the No. 2 spot this year, while catching Samsung will take longer, Chief Financial Officer Jiang Chao said in a Bloomberg Television interview yesterday.

“Lenovo’s share is only 2 percent higher than our company, so we will catch up to them very fast,” Jiang said in Shenzhen. “This year we could catch up with Lenovo, but not Samsung. Samsung will be another few years in the future.”

Total smartphone shipments in China will rise 44 percent to 300 million units this year, driven by handsets costing about 700 yuan ($113), researcher IDC forecast in December. Demand is surging as China Mobile Ltd., the world’s largest carrier by subscribers, aggressively encourages users of second-generation networks to upgrade to third-generation service with low- and middle-end smartphones. China Wireless, formed in 1993, has sold phones through China Mobile for a decade.

“Unlike Lenovo, which may rely more on open market channels, China Wireless’ strong business relationship with domestic telco operators secures a high level of shipment growth,” said Yuji Fung, a Hong Kong-based analyst with Oriental Patron Financial Group. “Strong smartphone growth is driven by the operator channel at the moment, via handset subsidies.”

Closing Gap

China Wireless, which sells phones under the “Coolpad” brand, will boost smartphone shipments to 30 million units this year, and 40 million units next year, from more than 20 million units last year, Jiang said. Samsung shipped 37.1 million smartphones in China last year and Lenovo 23.5 million, according to IDC.

“We are highly confident that we will continue to build on our momentum in China smartphones and in fact our global smartphone, tablet and PC businesses,” Jeffrey Shafer, a spokesman for Lenovo, said in an e-mail.

China Wireless surged to third place in China’s smartphone market in the three months ended September, up from sixth in the preceding quarter, according to IDC. That was the first time the company entered the top five. For 2012, Samsung led the China smartphone market with 17 percent share, compared with 11 percent for Lenovo, IDC data showed. China Wireless didn’t rank among the top five for the full year.

China Wireless will ship 38 million smartphones this year, just short of 40 million units for Lenovo, Lisa Soh, an analyst with Macquarie Group Ltd. in Hong Kong, said in an e-mail yesterday.

“China’s smartphone market is taking off this year,” Zhang Jun, an analyst with Greenwood Village, Colorado-based Wedge Partners Corp Zhang said in an e-mail yesterday. “Shipment growth of 50 percent is achievable, but Lenovo might grow faster than China Wireless.”

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net; Stephen Engle in Beijing at sengle1@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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