In the last year, major international handset makers have substantially increased R&D efforts in China while leading Chinese vendors, who had no in-house R&D to speak of two years ago, are now beefing up design capabilities. And a growing number of specialty design houses have begun to take contracts away from the South Korean and Taiwan firms which, until recently, dominated handset design for the China market.
Engineering headcounts illustrate the trend: Nokia has increased its engineering staff in Beijing by about 20% this year. Siemens intends to go from 180 to 400 by the end of the year, and to 1,600 by the end of 2005. Chinese maker TCL plans to double its current R&D manpower to 1,000 by year's end, and Beijing-based independent design firm Techfaith has plans to ramp up from its current 700 engineers to 1,500 by this time next year.
Nokia's Beijing R&D center now accounts for more than 40% of the company's total shipped volume worldwide – all handsets developed in Beijing and assembled globally, including some of its most successful products like the 2100, with a total of 22 million units shipped to date.
In this fickle market where any major retail outlet will carry as many as 800 different models, an R&D team on the ground is needed to respond quickly to shifting winds. "The dynamism of the market forces engineers to think very creatively, and to come up with a unique selling point for every new handset we design," says William Wong, VP of marketing and sales for San Jose-based Cellon, an independent design house active in China.
A short two years ago, leading Chinese handset vendors like Ningbo Bird and TCL were manufacturers in name only, doing mainly final assembly of SKD kits imported from original design manufacturers (ODM) firms in Taiwan and South Korea. These days, for Bird and TCL, most design and production (with the exception of core chipsets) is done in-house.
Dedicated handset design companies have also appeared on the Chinese scene in greater numbers. Beijing-based Techfaith, founded two years ago by a group of ex-Motorola employees, has contracted with vendors to design 62 different handsets this year. "This includes contracts with seven of the leading 10 domestic handset makers," says founder and chairman Dong Defu. The company recently raised US$14 million from investors, including Qualcomm, Intel, and HSBC, and plans a listing this year on Nasdaq or in Hong Kong.
You must log in to post a comment.
Yes, I would like to receive emails from China Economic Review. (You can unsubscribe anytime)
Copyright © 2018 SinoMedia Group Limited All rights reserved