Effects of China's communication industry policy on domestic cellphone manufacturers

Abstract

China's economy has matured so dramatically recently that it has become a major player as well a huge market, eyed eagerly by the rest of the world. In the communications industry, China is focused on extending the market share of domestic vendors by combining an overarching industrial policy with the supply and demand of the domestic market. The policy for the cellphone industry resulted in domestic vendors seeking a greater market share of domestic brand names. Due to these policies, gaining market share became a top priority for China's cellphone manufacturers, and domestic vendors paid less attention to enhancing their innovative capacities. Today, the manufacturing and technological capability of China's cellphone industry needs improvement. Therefore, due to industry policy, capital, cost, and risk issues, latecomers in the 3C (computer, communications, and consumer) industries in developing economies often expand their market share first before they engage in R&D. Today, the Chinese government is promoting domestic intermediate-goods vendors, such as the communications IC industry, to build an upstream component supply stream that will help promote the R&D capability of China's cellphone manufacturers.