Nokia to Increase China Research, Development
May 25, 2004
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Nokia (Helsinki, Finland), the world's biggest cell phone maker, says it will significantly increase its research in China.

Known for its sleek handsets and innovations and regarded as an industry bellwether, Nokia shocked markets in April when it announced lower earnings and sales for the first quarter and lowered forecasts for the second quarter, citing increased competition from American and Asian rivals such as Motorola Inc. and Samsung.

Nokia said the research and development expansion in China will be "significant," including the establishment of a research center in Beijing. The company has long said China, where it employs 4,300 workers, is a major market for it and an important center of development for expanding its Asian business.

"China is definitely a strategic part of Nokia's global R&D network," said Nokia chairman and CEO Jorma Ollila. "With increasing depth in China's talent base and an improving regulatory environment for R&D, we see excellent opportunities to expand our collaboration with leading domestic institutions."

Nokia said that 40 percent of the company's global handsets will be designed at the Beijing, China center, and that it will cooperate with 10 Chinese universities to further develop new ideas.

After earnings report in April, analysts said Nokia, which had led the industry, had fallen behind recent trends in the mobile market, often set in Asia, like clamshell models.

Also, the company was deemed unable to provide a sufficient range of affordable models, including popular camera phones.

Nokia reported a 15 percent drop in mobile phone sales during the first quarter, to 4.3 billion euros ($5.2 billion), down from 5 billion euros a year ago.

Nokia, whose mobile phone sales account for 80 percent of total revenue, has focused increasingly on the handset market. In April, it unveiled a new, stripped-down version of N-Gage gaming deck series after the first version was seen as too cumbersome and expensive.

Nokia is still is the handset market leader but earlier this month analysts estimated it had lost as much as 5 percent market share to 29 percent, followed by Motorola with 16 percent and Samsung with 13 percent.

Nokia said it is still targeting a 40 percent market share in mobile phones, and plans to launch 40 new products this year, patching up gaps in its selection of phones. (Associated Press)

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