Siemens price cuts spark phone disputes
14/6/2005 17:19
Jane Chen / Shanghai Daily news
Shortly after
Taiwan-based BenQ Corp agreed to take over Siemens AG's handset unit last week,
Siemens phones are being offered at deep price cuts in the market, a move that
has surprised the industry and sparked controversies.
While the price cuts
range from 200 yuan (US$24) to over 1,000 yuan, the deepest, at 2,000 yuan, goes
to the S65 phone. The phone, with a 1 mega-pixel digital camera, was priced at
3,980 yuan.
Another Xelibri7 model, targeting fashion-conscious youths, is
now 398 yuan, compared with the previous 1,780 yuan.
Some market analysts are
seeing the price-cuts as a result of the Siemens-BenQ agreement, which requires
Siemens, Europe's second-biggest mobile phone maker, to hand over its
profit-losing phone unit to BenQ before October after clearing up the debts
attached to the unit. That has forced Siemens to adopt price cuts to reduce its
stockpile and make up for the losses, the analysts said.
But Siemens has
denied the claim.
Wang Chengdong, sales director of Siemens' China telecom
department, said it is impossible and unprofitable for Siemens to sell phones at
such low prices because the cooperation with BenQ is a long-term program.
Instead, he blamed phone retailers for the price avalanche.
However, key
phone retailers in Shanghai have sharply rejected his accusation.
An official
with Suning Corporation's Shanghai unit said it is impossible for retailers to
offer such big price discounts because of the already low profit margins of the
phone market.
"This is an unusual price cut," said Li Qiang, CEO of
www.139shop.com, an online phone retailing website, echoing Suning's
opinion.
"As well, this price cut has in fact nothing to do with the BenQ
agreement nor the retailers," he said, indicating it is an independent move
initiated by Siemens.
"Siemens' Shanghai plant began huge volumes of phone
shipments shortly after the acquisition was announced," he pointed out.
Citing close sources, he said Siemens has a plan to sell 40,000 phones in
two months, and so far about 10,000 have been sold.
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