Phone makers' profits not huge: expert
10/7/2003 15:02
China's mobile phone makes are not making sudden huge profits as
widely assumed, a recent price test report by the country's telecom authority
indicated.
Although listed as the seventh of the top 10 profitable industries
in the country's manufacturing sector, cell phone making industry boosts an
average profit margin short of 10 percent, according to Wang Cunyan, director of
the telecom industry section of the Information Industry Ministry's Electronic
information industry research institute.
His section has conducted the price
test and drafted the report.
"The rate is not huge at all," Wang said.
He
blamed the costs at the sales channel and technical patent fees for lowering the
profit level.
"Manufacturing takes about 60-70 percent of the total cost, but
the distributors take the rest 30-40 percent," Wang said.
"The gross profit
rate, generally of 30-40 percent, is reduced to hardly 10 percent, after taxes
and expenditures to wholesalers and retailers are excluded," he said.
Profit
taken by the distributors wipes out some half of the manufacturers' gross
profits, Wang added.
According to Wang, cost for a phone is about 1,200 to
1,500 yuan (US$145-181), including the expenditures for manufacturing materials,
operation cost, research and development and sales.
Jane Chen/ Shanghai Daily news
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