Report: China's Mobile Phone Sales Channels

CCID Consulting, a consulting and IT outsourcing service provider based in China, recently commented on China’s mobile phone sales channels, indicating that they are expected to enter a new era of "national general agents."

Li Jun, CEO of CCID Consulting, says China P&T and Telling, the two largest national general agents in China respectively, released sales figures which startled the industry in early 2007 ; both achieved growth much faster than average market growth. In 2006, China P&T Appliances sold a total of almost 43.20 million communication terminals. These included 33.82 million mobile phones, accounting for a market share of close to 30%, up by 120% year-on-year.

Telling sold 12.47 million mobile phones, up by 116% year-on-year, with a market share of over 10%. The huge sales volumes and market shares of almost 50% by these two national general agents imply a return of the national general agent model (Level one model).

CCID Consulting’s research reveals that in the next five years, distribution, direct supply and operator models will be the three main channel models in China. The distribution model, represented by such national general agents as China P&T Appliances and Telling, will gain a dominant position.

Meanwhile, the traditional level-by-level national agent model will be thoroughly changed. Traditional national agents will be replaced by integrated marketing services providers. Amidst the channel change, traditional national agents have fully implemented flattening reforms and developed direct retail customers and direct supply terminals to gradually replace former Level two and three distributors.

Taking Telling and Fortune Telecom as examples, the two companies have not only expanded the sales coverage of their branches since 2004, but more importantly, greatly increased direct supply retail shops. In 2006, both Telling and Fortune Telecom had over 10,000 retail customers and covered more than 30,000 terminal shops.

Secondly, there has been deep involvement in retail and mobile phone repair businesses. In 2006, China P&T Appliances set up CentreYou to engage specifically in mobile phone sales and repairs. It transferred all the businesses in 10 major sales regions and PTAC’s over 200 mobile phone marketplaces to CentreYou to operate. Telling set up Itell and Tellingtech to specifically engage in retail and after-sales repair services, making breakthrough progress in 2006.

Capital operations laid solid fund foundations for terminal makers and operators to provide network-wide marketing solutions. Currently, two of China’s six largest national agents have been receptively listed in Shanghai and Hong Kong. Meanwhile, JiangXi Gannan Fruit, which controls Telling, is positioned to launch a 700 million Yuan capital and share expansion plan.

The number one general agent, China P&T Appliances, is also actively integrating its internal resources and planning the listing of its mobile phone distribution businesses.

Mobile phone sales channels in China are therefore expected to enter a new era of "national general agents." By then, the center of channels in the whole mobile phone market will shift to a few channel distributors with total network coverage, strong ability of professional management, fast response, high efficiency and sound logistics and information platforms.