GFK Channel Report 2009Q3(English)

GfK ChinaGSM Mobile Phone – Distribution Channel Report2009 3rd Quarter

GfK Group Mobille Phone – Distribution Channel Report Nov 2009

© Copyright of GfK China

Manufacturer Channel Policies & Development3

1 Manufacturer Dynamics and Channel Overview

Performance of Main National Distributors4

Performance of Manufacturers at Retail Level5

Distribution Modes for Key New Products6

Content

Appendix7

Regional Characteristics of Retail & Channel2



Manufacturer Dynamics and Channel Overview

1

4

GfK Group Mobile Phone – Distribution Channel Report Nov 2009


1. National Distribution (ND): The process in which distributors purchase products from the manufacturers and distribute them national wide lower grade distributors or retailers through their subsidiaries.

2. District Distribution (DD): The process in which regional/provincial/small area distributors purchase products from manufacturers and distribute them to lower-level distributors or retailers

3. (National) Fulfillment Distribution (FD): The process in which distributors serve only as financial and logistic platforms, while manufacturers’ branches promote sales at retail level.

4. Direct Retail Partner (DRP) : manufacturers deliver products to their direct retail partners directly, which are usually nation-wide or regional chain stores.

5. Operator Bundle (OB): The process in which operators purchase or customize products through operator platforms or professional companies from the manufacturers or distributors, and platforms or companies deliver the products to the operator sales halls and authorized social stores.

Definition of Distribution Channels

5



1. Telecom Chain Store (TCS): The store who sells handset and related service only, and there are more than 3 shop-front in total, such as D-Phone…

2. Home Electronic Chain Store (HECS): The mall who sells electronic products, including handset/household appliances/PC/digital products, etc. And there are more than 3 shop-front in total , such as Gome…

3. Telecom Independence Store (TIS): The store who sells handset and related service only, and there are less than 3 shop-front in total, such as D-Phone…

4. Operator Sales Hall (OSH) : Belonged to operators or cooperated with operators by social retailers, not only sells handset but also offer the mobile communication service. CMCC/CU/CT…

5. Others : Including IT malls (Major business is IT products, such as PC-Mall…)/ Department stores (comprehensive store with dress/electronic products, etc, such as Ito Yakado… )/ Super market (such as Wal-mart…) ,and so on

Definition of Retail Types

6



The operator bundling channel decreased most among all channels. One important reason for the sharp fall of bundle channel market share is that operators are moving

their subsidies to 3G market In addition, CMCC’S bundling sales for very low-tier phones in rural areas was replaced by the mid-

range phones of campus promotion campaign. As a result, the total amount of bundling sales decreased.

Bundling sales volume and share both decreased

Key Channel Issues Q3, 2009

Market share of telecom chain stores (TCS) grew, while that of operator sales halls (OSH) declined

With M&A of TCS retailers, they have better financial and logistical capacities to expand their coverage in small cities and counties. Their product lines were going to low-end.

Meanwhile, the operator sales halls dropped significantly with the sharp reduce of handset subsidies in counties and rural areas.

Market share of ND kept an increasing trend, while the DRP dropped ND market sees a steady growth. The main reason is that Motorola and SonyEricsson cut the

investment to DRP, instead, they collaborate more with ND distributors with focusing their target on mid range & high-end. This change help them reduce the sales force cost, avoid financial risk, and to be more profitable.

7



In the end of 2nd quarter, rumor had that Nokia was going to developing Internet channel and authorizing the sales rights to on-line stores. However, Nokia’s channel conflicts would only deteriorate if the on-line sales volume exceeds actual stores and cause more price and channel issues.

In the 3rd quarter, Nokia continued to deepen the cooperation between WKA (Wholesales Key Account) plan and IS (Inner Sales) telephone sales plan. The countryside market continued to develop, the sales volume increased over 13% compared with the last quarter.


Samsung’s five former corporations had changed to five branches , which lead to Samsung’s market share rise in GSM market.

Suning, a retail store, for the first time was authorized as an exclusive agency for a new phone coming to market— Samsung M2710C. This will prove to be effective in preventing channel conflicts.

This quarter, ND’s share rose 4 percentage points to 71%, and was a leading channel in GSM channel structure.

8



After cancelling FD channel, Motorola’s sales volume increased in GSM market, the declining market share was slowing down also. The advantage of ND is becoming clear.

The profit strategy of Motorola changed from large scale sales model to high marginal profit model. However, the troubles from similar looking cell phones and illegal imported phones on market made it harder for the latter profit model executable in China.

The share of ND kept increasing in Moto’s channel structure and reached to 54.9% this quarter from 44.3% of the last quarter.

After Sharp come back China market, it reinforced the collaboration with PTAC and Telling, two of the largest national distributors. This method utilizes the established ND channel, focuses on terminal spreading of shopping mall and telecom chain stores.

Furthermore, sharp’s MSRP (manufacturer suggest retail price) strategy is distributor-oriented. The margin for distributors could be as high as 27%-28%. Sharp also approve the price higher than MSRP. These, to a great extent, improve distributors’ enthusiasm to push Sharp.

Sharp is expanding cooperation with China Mobile, the largest telecom operator in China. Sharp probably will enter bundle market in Q4.


9



After cancelling DRP channel, Sony Ericsson strengthened it’s ND channel, and had a sales increase in this quarter.

Sony Ericsson’s sales volume increased in open market and reached 910k in GSM total market this quarter, it sold 90k more than the last quarter, the increase rate is 11%.

Sony Ericsson’s bundling market sales continued to fall 6.2% since the last quarter, its bundling share had dropped 1 percent point.

As the third largest cell phone manufacturer, LG planed to increase its sales sites to 13,000. LG’s channel structure constructing will perform well after the new general manager of China mobile telecom department took the place, given his former excellent performance in channel sales.

LG deepened its ND channel after its former staff adjustment; the share of ND channel grew over 10 percent points to 83.7% this quarter since the last one. The sales volume of ND rose to 762k this quarter, increased 42.9% since the 2nd quarter.


10



29%

23%

7%3%

18% 20%

29%23%

8%3%

17%21%

31%

22%

8%3%

17% 18%

Q4,2008 Q1,2009 Q2,2009 Q3,2009

NDNational

Distribution

DDDistrict

Distribution

FDFulfillmentDistribution

NFDNational

FD

DRPDirect toRetailer

OBOperator’s

Bundle

Mkt. Share 31.18% 22.28% 8.14% 3.32% 16.84% 18.24%

Sell-out Volume

(M)11.07 7.91 2.89 1.18 5.98 6.48

Growth Rate

(QoQ)13.1% 2.8% 11.8% 20.8% 0.3% -9.5%

Development of GSM Channel Structure

In the third quarter, the channel share and sales volume of OB have fell, and the sales volume of ND FD and NFD have gone up with a slight share increase；

Market Share Development by Distribution Channels in GSM Market

11



TIS remains holding the largest market share, which has increased by 0.1 percentage points since the last quarter;

Operator Sales Hall have decreased by 2.0 percentage points respectively.

Retail Type Structure in GSM Market

Market Share of Retail Type Structure

34.9%

33.3% 9.8%

17.2%

4.8%

Telecom Chain Store Home Electric Chain Store

Operator Sales Hall

OthersTelecom Independent Store

+0.6

-2.0

+0.1

+1.3

Q3, 2009

12



Development trend of Retail Type in GSM Market

TIS share is 34.9% this quarter, which is 0.1 percentage points higher than the last quarter； HECS share increased by 0.6 percentage point than the last quarter ； OSH share dropped by 2 percentage points from 19.2% the last quarter to 17.2% this

quarter.

33.3% 35.3% 36.5% 38.1% 36.9% 36.9%34.6% 34.8% 34.9%

31.3% 32.5% 32.3% 31.2% 31.1% 30.5% 29.6%32.0% 33.3%

9.9% 10.9% 9.9% 9.7% 10.1%10.0% 9.9% 9.2% 9.8%

20.0% 15.6% 15.7% 16.1% 16.8%17.7%

21.0% 19.2% 17.2%

5.5% 5.7% 5.6% 5.0% 5.2%4.9% 4.9% 4.8% 4.8%

Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09

TISTCSHECSOSHOTH

Retail Type Developing Trend in GSM Market

13



Channel Structure by Price Tier in GSM Market

ND FD NFD DRP OB

Below 1000 RMB 1000-2000 RMB 2000~3000 RMB

3000~4000 RMB 4000~5000 RMB Above 5000 RMB

DD

14



Retail Type Structure by Price Tier in GSM Market

TIS TCS HECS OSH Others

Below 1000 RMB 1000-2000 RMB 2000~3000 RMB

3000~4000 RMB 4000~5000 RMB Above 5000 RMB

15



LG performed well in home electric chain store channel in Q3.

Tianyu’s market share had dropped in TIS channel which it performed best in all four channels.

Main Brand Market Share by Retail Type

Telecom Independent Store Telecom Chain Store

Home Electric Chain Store Operator Sales Hall

Nokia SamsungMOTO S.E. LG Lenovo

35.2%

17.1%

6.1% 5.8% 4.5%3.8%

34.1%

19.2%

6.1% 4.7% 5.5%3.5%

Q2'2009Q3'2009

Nokia SamsungMOTO Tianyu Gionee Lenovo

44.8%

18.0%

5.3% 3.8% 2.7% 2.4%

44.9%

16.5%

4.6% 3.4% 2.9% 2.8%

Q2'2009Q3'2009

Nokia Samsung MOTO Gionee Lenovo S.E.

41.3%

18.7%

5.7% 3.3% 3.3% 3.2%

40.4%

19.4%

4.7% 3.0% 3.8% 2.9%

Q2'2009Q3'2009

Nokia SamsungMOTO Haier Lenovo LG

54.4%

27.3%

5.1% 3.3%2.7% 1.7%

53.8% 30.2%

4.0% 2.0%2.7%

1.5%

Q2'2009Q3'2009



Regional Characteristics of Retail & Channel2

17



Market Share by Distribution Channel /Total Q3, 2009

ND Channel DD Channel FD Channel

NFD Channel DRP Channel OB Channel

Samsung39%

Nokia39%

Dopod0%

SHARP1%

LG7%

Motorola10%

SonyEricsson4%

Lenovo13%

Others61%

Tianyu12%

LG0%

Dopod0%

Motorola0%

SonyEricsson2%

Gionee11%

Nokia,99.50%

Others,0.50%

Nokia,100.00%

Nokia42%

Motorola13%

Others30%

Dopod1%

Tianyu4%

Lenovo6%

SHARP4%

Nokia51%

Others14%

Samsung24%

LG1%

Motorola3%

Lenovo6%

Dopod1%

18



Market Share by Retail Type /Total Q3, 2009

Telecom Independent Store


Operator Sales Hall Others

NOKIA46%

OPPO2%

BBK2%

BIRD2%

Others14%

SAMSUNG

20%

SONYERICSSO

N2%

GIONEE2%

LENOVO2%

MOTOROLA6%

TIANYU2%

NOKIA38%

TIANYU2%

LG2%

SONYERICSSO

N3%

Others16%

SAMSUNG

19%

OPPO3%

GIONEE3%

LENOVO4%

MOTOROLA7%

BBK3%

NOKIA31%KONKA

3%

OPPO3%

AUX3%

Others17%

SAMSUNG

18%

SONYERICSSO

N4%GIONEE

4%BBK5%

MOTOROLA7%LG

5%

NOKIA57%

GIONEE1%LG

1%

HUAWEI1%

Others3%

SAMSUNG

24%

HAIER2%

TIANYU2%

LENOVO3% ZTE

3%

MOTOROLA3% NOKIA

44%

KONKA2%

LG2%

GIONEE2%

Others12%

SAMSUNG

19%

BIRD2%

SONYERICSSO

N2%

TIANYU4% MOTORO

LA8%

LENOVO3%

19



Market Share by Distribution Channel /Central Region Q3, 2009



Samsung39%

Nokia39%

Dopod0%

SHARP1%

LG7%

Motorola10%

SonyEricsson4%

Lenovo13%

Others61%

Tianyu12%

LG0%

Dopod0%

Motorola0%

SonyEricsson2%

Gionee11%

Nokia,99.50%

Others,0.50%

Nokia,100.00%

Nokia42%

Motorola13%

Others30%

Dopod1%

Tianyu4%

Lenovo6%

SHARP4%

Nokia51%

Others14%

Samsung24%

LG1%

Motorola3%

Lenovo6%

Dopod1%

20



Market Share by Retail Type /Central Region Q3, 2009




NOKIA46%

OPPO2%

BBK2%

BIRD2%

Others14%

SAMSUNG

20%

SONYERICSSO

N2%

GIONEE2%

LENOVO2%

MOTOROLA6%

TIANYU2%

NOKIA38%

TIANYU2%

LG2%

SONYERICSSO

N3%

Others16%

SAMSUNG

19%

OPPO3%

GIONEE3%

LENOVO4%

MOTOROLA7%

BBK3%

NOKIA31%KONKA

3%

OPPO3%

AUX3%

Others17%

SAMSUNG

18%

SONYERICSSO

N4%GIONEE

4%BBK5%

MOTOROLA7%LG

5%

NOKIA57%

GIONEE1%LG

1%

HUAWEI1%

Others3%

SAMSUNG

24%

HAIER2%

TIANYU2%

LENOVO3% ZTE

3%

MOTOROLA3% NOKIA

44%

KONKA2%

LG2%

GIONEE2%

Others12%

SAMSUNG

19%

BIRD2%

SONYERICSSO

N2%

TIANYU4% MOTORO

LA8%

LENOVO3%

21



Market Share by Distribution Channel /East Region Q3, 2009



Samsung44%

Nokia33%

SHARP1%

Dopod0%

LG7%

Motorola9%

SonyEricsson6%

Others70%

Lenovo10% Gionee

9%

Motorola0%LG

0%

Amoi1%

SonyEricsson2%

Tianyu7%

Nokia,99.60%

Others,0.40%

Nokia,100.00%

Nokia49%

Lenovo9%

Others25%

Dopod1%

Motorola7%

Tianyu7%

SHARP2%

Nokia40%

Others10%

Samsung33%

Dopod1%

Motorola6%

Lenovo7%

LG3%

22



Market Share by Retail Type /East Region Q3, 2009




NOKIA45%

LG1%

BBK2%

SONYERICSSO

N2%

Others15%

SAMSUNG

18%

GIONEE3%

OPPO3%

TIANYU3%

MOTOROLA5%

LENOVO3%

NOKIA40%

BBK2%

GIONEE2%

LG3%

Others15%

SAMSUNG

19%

TIANYU3%

SONYERICSSO

N3%

LENOVO4%

MOTOROLA6%

OPPO3%

NOKIA33%

GIONEE3%

TIANYU3%

OPPO4%

Others15%

SAMSUNG

18%

LENOVO4%

BBK4%

SONYERICSSO

N5%

MOTOROLA6%

LG5%

NOKIA47%

DOPOD0%HUAWEI

1%

ZTE1%

Others2%

SAMSUNG

34%

LG1%

TIANYU2%

LENOVO4%MOTORO

LA5%

HAIER3%

NOKIA45%

LG2%

BBK2%

GIONEE2%

Others15%

SAMSUNG

16%

OPPO2%

SONYERICSSO

N3%

LENOVO4%

MOTOROLA6%

TIANYU3%

23



Market Share by Distribution Channel /North Region Q3, 2009



Nokia50%

SonyEricsson2%Tianyu

4%

Motorola8%

Lenovo6%

SHARP4%

LG3%

SHARP0%

Samsung23%

Lenovo13%

Others61%

Tianyu12%

LG0%

Dopod0%

Motorola0%

SonyEricsson2%

Gionee11%

Nokia,99.70%

Others,0.30%

Nokia,100.00%

Nokia53%

Dopod0%

Others7%

Samsung25%

Amoi1%

LG3%

Motorola8%

Lenovo2%

Nokia41%

Motorola13%

Others31%

Dopod1%

Tianyu4%

Lenovo6%

SHARP4%

24



Market Share by Retail Type /North Region Q3, 2009




NOKIA48%

PHILIPS1%

AUX1%

OPPO2%

Others16%

SAMSUNG

17%

GIONEE2%

CHANGHONG2%

MOTOROLA4%

TIANYU5%

LENOVO2%

NOKIA45%

PHILIPS1%

SHARP1%

OPPO2%

Others12%

SAMSUNG

23%

LG3%

SONYERICSSO

N3%

LENOVO3%

MOTOROLA4%

TIANYU3%

NOKIA34%

BBK2%

HAIER2%

GIONEE3%

Others16%

SAMSUNG

18%

SONYERICSSO

N3%

LENOVO4%

TIANYU6%

MOTOROLA7%

LG5%

NOKIA59%

PHILIPS1%AMOI

1%

LENOVO1%

Others1%

SAMSUNG

25%

TIANYU1%

HAIER1%

ZTE2%

MOTOROLA6%

LG2%

NOKIA38%

GIONEE1%

OPPO1%

KONGPROFIT

2%

Others15%

SAMSUNG

20%

LG2%

SONYERICSSO

N2%

TIANYU7%

MOTOROLA7%

LENOVO5%

25



Market Share by Distribution Channel /Northeast Region Q3, 2009



Nokia39%

SonyEriccon4%

Motorola11%

LG7%

SHARP2%

Dopod0%

Samsung37%

Lenovo13%

Others66%

Gionee11%

Motorola0%LG

0%

Amoi1%

SonyEricsson1%

Tianyu7%

Nokia,100.00%

Nokia46%

Others7%

Samsung32%

SonyEricsson0%

Lenovo6%

Motorola8%

LG1%

Nokia51%

Motorola11%

Others25%

Dopod0%

Lenovo2%

Tianyu9%

SHARP2%

Nokia,99.50%

Others,0.50%

26



Market Share by Retail Type /Northeast Region Q3, 2009




NOKIA43%

LG1%

SONYERICSSO

N1%

TIANYU3%

Others13%

SAMSUNG

18%

LENOVO3%

CHANGHONG3%

PHILIPS5%

MOTOROLA6%

GIONEE4%

NOKIA41%

CHANGHONG2%

LG2%

TIANYU2%

Others17%

SAMSUNG

19%

SONYERICSSO

N2%

LENOVO3%

GIONEE3%

MOTOROLA6%

PHILIPS3%

NOKIA34%

LENOVO3%

GIONEE3%

SONYERICSSO

N3%

Others15%

SAMSUNG

19%

PHILIPS3%

TIANYU4%

LG6%

MOTOROLA6%

BBK4%

NOKIA51%

BIRD0%ZTE

1%

LG1%

Others1%

SAMSUNG

33%

TIANYU1%

GIONEE1%

HAIER3%

MOTOROLA6%

LENOVO2%

NOKIA35%

CHANGHONG3%

PHILIPS3%

BIRD3%

Others17%

SAMSUNG

17%

GIONEE3%

LENOVO4% TIANYU

4%

MOTOROLA7%

SONYERICSSO

N4%

27



Market Share by Distribution Channel /Northwest Region Q3, 2009



Samsung41%

SonyEricsson6%

Motorola12%

LG10%

Dopod0%

SHARP1%

Nokia30%

Gionee14%

Others63%

Lenovo12%

LG0%Motorola

0%

Amoi0%

SonyEricsson1%

Tianyu9%

Nokia,100.00%

Nokia45%

Others12%

Samsung33%

Dopod1%

Lenovo3%

Motorola4%

LG2%

Nokia57%

Motorola8%

Others23%

Dopod1%

Lenovo3%

Tianyu6%

SHARP2%

Nokia,99.70%

Others,0.30%

28



Market Share by Retail Type /Northwest Region Q3, 2009




NOKIA40%

BIRD2%

DAXIAN2%

JPG2%

Others17%

SAMSUNG

15%

LENOVO3%

CHANGHONG4%

TIANYU5%

MOTOROLA6%

GIONEE4%

NOKIA39%

LG2%

OPPO2%

BBK2%

Others17%

SAMSUNG

18%

BIRD2%

GIONEE4%

MOTOROLA5%

LENOVO5%

TIANYU4%

NOKIA37%

LENOVO2%

TIANYU2%

OPPO3%

Others9%

SAMSUNG

19%

BBK3%SONY

ERICSSON

3%

GIONEE7%

LG8%

MOTOROLA7%

NOKIA55%

DOPOD0%

TIANYU1%

ZTE1%

Others1%

SAMSUNG

31%

LG2%

HAIER2%

MOTOROLA2%

BIRD3%

LENOVO2%

NOKIA36%

BIRD2%

SONYERICSSO

N2%

KONKA2%

Others20%

SAMSUNG

16%

BBK3%

TIANYU4%

LENOVO5%

MOTOROLA6%

GIONEE4%

29



Market Share by Distribution Channel /South Region Q3, 2009



Samsung40%

LG6%

SonyEricsson9%

Motorola7%

Dopod0%

SHARP1%

Nokia37%

Lenovo12%

Others66%

Gionee11%

Motorola0%

LG0%

Dopod0%

SonyEricsson3%

Tianyu8%

Nokia,100.00%

Nokia73%

Others3%

Samsung18%

LG1%

Lenovo1%

Motorola2%

SonyEricsson1%

Nokia29%

Lenovo12%

Others34%

Dopod0%

Motorola9%

Tianyu11%

SHARP5%

Nokia,99.9%

Others,0.1%

30



Market Share by Retail Type /South Region Q3, 2009




NOKIA46%MOTORO

LA2%

OPPO2%

LENOVO2%

Others22%

SAMSUNG

12%

TIANYU2%

BBK3%

GIONEE3%

SONYERICSSO

N3%

JPG3%

NOKIA42%

KONKA2%

KONGPROFIT

2%

MOTOROLA2%

Others18%

SAMSUNG

19%

TIANYU2%

OPPO3%

LENOVO3% GIONEE

4%

SONYERICSSO

N3%

NOKIA39%

OPPO2%

SHARP2%

PHILIPS3%

Others9%

SAMSUNG

21%

GIONEE3%

LENOVO3%

LG6%

SONYERICSSO

N7%

MOTOROLA5%

NOKIA63%

ZTE0%

BIRD0%

LENOVO0%

Others0%

SAMSUNG

32%

DOPOD0%

LG1%

SONYERICSSO

N1%

MOTOROLA2%

TIANYU1%

NOKIA46%

GETEK2%

LENOVO2%

MOTOROLA2%

Others17%

SAMSUNG

17%

OPPO2%

GIONEE2% TIANYU

2%

SONYERICSSO

N6%

BBK2%

31



Market Share by Distribution Channel /Southwest Region Q3, 2009



Samsung47%

Motorola6%

SonyEricsson8%

LG8%

Dopod0%

SHARP0%

Nokia31%

Lenovo20%

Gionee13%

Others59%

SonyEricsson2%

Tianyu5%

Nokia,100.00%

Nokia38%

Others15%

Samsung26%

SonyEricsson3%

Motorola5%

Lenovo9%

LG3%

Nokia48%

Motorola9%

Others32%

Dopod0%

Lenovo3%

Tianyu7%

SHARP1%

Nokia,99.1%

Others,0.9%

32



Market Share by Retail Type /Southwest Region Q3, 2009




NOKIA43%

KONKA2%

OPPO2%

CHANGHONG2%

Others21%

SAMSUNG

11%

BBK2%

LENOVO4%

TIANYU4%

MOTOROLA5%

GIONEE4%

NOKIA35%BBK

2%

LG2%

TIANYU2%

Others18%

SAMSUNG

20%OPPO

3%

SONYERICSSO

N4% GIONEE

5%

MOTOROLA5%

LENOVO4%

NOKIA36%

KONKA2%

BBK2%

TIANYU2%

Others12%

SAMSUNG

19%

GIONEE3%

LENOVO3%

SONYERICSSO

N7%

LG8%

MOTOROLA6%

NOKIA54%

DOPOD1%

BIRD1%

KONKA2%

Others2%

SAMSUNG

27%

LG2%TIANYU

2%

HAIER3%

LENOVO4%

MOTOROLA2%

NOKIA37%

LG2%

GIONEE2%

MALATA2%

Others13%

SAMSUNG

21%

LENOVO3%

TIANYU3%

KONKA4%

MOTOROLA9%

SONYERICSSO

N4%



Manufacturer Channel Policies & Development3

34



Main Channel Structure in GSM Market Q3, 2009

Brand ND DD FD/NFD DRP OB

28.5% 20.8% / 8.5% 19.8% 22.4%

71.3% 28.7%

54.9% 26.5% 18.2%

76.6% 17.9% 5.5%

83.7% 1.2% 15.1%

57.5% 42.5%

54.6% 25.5% 19.9%

88.0% 12.0%

64.2% 35.8%

16.7% 39.0% 18.2% 26.1%

Nokia’s ND, FD and NFD share increased in the 3rd quarter; its DRP and OB share declined;

Samsung’s ND share increased significantly; Motorola’s ND share increased while the shares of other channels fell.

Q3, 2009

http://www.dopod.com/pc/index.php

http://image.baidu.com/i?ct=503316480&z=0&tn=baiduimagedetail&word=LG+logo&in=7472&cl=2&cm=1&sc=0&lm=-1&pn=0&rn=1

35



28.6% 31.7% 26.3% 26.0% 28.5%

21.4% 18.4% 17.9% 19.1% 20.8%6.2% 7.2% 7.3% 7.2% 8.5%23.2% 23.9% 21.6% 21.7% 19.8%

20.6% 18.9% 27.0% 26.0% 22.4%

Q3'08 Q4'08 Q1'09 Q2'09 Q3'09

61.8% 59.7% 61.0% 67.0% 71.3%

38.2% 40.3% 39.0% 33.0% 28.7%

Q3'08 Q4'08 Q1'09 Q2'09 Q3'09

41.2% 37.8% 33.5% 44.3% 54.9%1.3% 0.9% 1.1%

0.4%0.4%5.6% 7.7% 8.5%

28.6% 29.8% 34.6% 32.9% 26.5%

23.3% 23.8% 22.4% 22.3% 18.2%

Q3'08 Q4'08 Q1'09 Q2'09 Q3'09

42.0% 41.5% 40.4%78.4% 76.6%

16.4% 17.6% 14.3%

15.1% 17.9%33.9% 32.1% 36.6%7.7% 8.8% 8.6% 6.5% 5.5%

Q3'08 Q4'08 Q1'09 Q2'09 Q3'09

68.6% 68.0% 72.7% 78.3% 83.7%

5.5% 4.1% 2.7% 1.8% 1.2%25.9% 27.8% 24.6% 19.9% 15.1%

Q3'08 Q4'08 Q1'09 Q2'09 Q3'09

Change of Channel Structure by Brand

The ND share of SHARP increased significantly during this quarter, because of the collaboration with PTAC and Telling.

ND DD FD NFD DRP OB

0.0% 10.0%34.1% 44.8%

64.2%

100.0%

90.0%65.9% 55.2%

35.8%

Q3'08 Q4'08 Q1'09 Q2'09 Q3'09


36



Channel Profit Margin Distribution of Nokia Q3, 2009

Provincial Distributors & ND’s Branch

用户

OSH(21.2%)

Others(4.6%)

HECS(7.6%)

TCS(30.8%)

TIS(35.8%)

National Distributors

FD/NFDWKA *

DRP

Operation Platform

* WKA: Wholesales Key Account

44.6% 19.8% 35.6%

16.1%

6.3%

4.5%12.8%

12%1%

37


© Copyright of GfK China用户

Channel Structure of Samsung Q3, 2009

Provincial Distributor & ND's Branch

National Distributor

Small Area Distributor

100%

71.3% 28.7%

OSH(25.8%)

Others(4.2%)

HECS(9.3%)

TCS(32.1%)

TIS(28.5%)

Operator Platform

38



Channel Structure of Motorola Q3, 2009


用户


Key Wholesales

DRP26.9%73.1%

54.9%

18.2%

OSH(14.4%)

Others(6.2%)

HECS(12.6%)

TCS(33.3%)

TIS(33.6%)

Operator Platform

2.3%

39



Channel Structure of Sony Ericsson Q3, 2009



District Distributors

用户

Provincial Distributors

5.5%

23.4%76.6%

76.6% 17.9%

OSH(2.9%)

Others(6.3%)

HECS(20.0%)

TCS(41.7%)

TIS(29.1%)

Operator Platform

40



Channel Structure of LG Q3, 2009

用户



15.1%84.9%

100%

OSH(12.0%)

Others(4.5%)

HECS(27.4%)

TCS(35.7%)

TIS(20.3%)

Operator Platform


41



Channel Structure of Sharp Q3, 2009

用户



DRP

TIS(24.5%)

TCS(45.5%)

HECS(24.9%)

Others(5.1)

OSH(0.0%)

Operator Platform

64.2% 35.8%

42



Channel Structure of K-Touch Q3, 2009

用户

Small Area Distributors



DRP 42.5%27.5％

TIS(43.0%)

TCS(30.1%)

HECS(10.7%)

Others(6.7%)

OSH(9.5%)

Operator Platform

30.0％

43



Channel Structure of Dopod Q3, 2009




用户

DRP

Operator Platform

65.1%16.7%

26.1%

18.2%

39.0%

OSH(34.0%)

Others(6.3%)

HECS(9.5%)

TCS(29.0%)

TIS(21.3%)


44



Channel Profit Margin Distribution of Nokia Q3, 2009


用户

OSHOthers HECSTCSTIS


≈10 %≈3%

792

831

873

978 978

≈18%

978

FD/NFD

978

≈5%

≈12%

829

WKA *

828

≈4.5%865≈13%

≈4%889 906 ≈6%

≈8%

Total: ≈ 21.0%

DRP

≈8%855

≈3%855

Operation Platform

≈8%855

≈3%855

Average Shipment Price /RMB

Average Retail Price (Q3) /RMB

Retail Margin %

* WKA: Wholesales Key Account

45



Channel Profit Margin Distribution of Motorola Q3, 2009


用户



≈8 %≈4.5%

880

911

952

1057 1057


≈18%

1057 1057Average Retail Price (Q3) /RMB

≈3.5%

≈11%

Key Wholesales

896

Retail Margin %≈6%979

979 ≈3%

≈8%

TOTAL:≈ 20.0%

DRP

≈5%924

≈1%924

Operator Platform

46


© Copyright of GfK China用户


1017 1017

≈12%

1017Average Retail Price (Q3) /RMB

≈8%Retail Margin % ≈10%

Channel Profit Margin Distribution of Samsung Q3, 2009

Provincial Distributor & ND's Branch Operator Platform


Small Area Distributor

806Average Shipment Price /RMB

TOTAL:≈ 24.0%

≈6.5%858

≈4.5%897

≈3.5%942

≈6%908 ≈6%925

≈8%872

47



Channel Profit Margin Distribution of Sony Ericsson Q3, 2009



District Distributors

用户


1335 1335

≈8%

1335Average Retail Price (Q3) /RMB




TOTAL:≈ 18.0%

≈3%1167

≈4%1214 ≈5%1236

≈4%1177

1133

≈6%1260

≈5%1188

Operator Platform

48



Channel Profit Margin Distribution of LG Q3, 2009

用户


1036 1036Average Retail Price (Q3) /RMB





TOTAL:≈ 26.0%

≈6%870

≈4.5%909 ≈6%901

≈4%850

Operator Platform


49



Channel Profit Margin Distribution of K-Touch Q3, 2009

用户



TOTAL:≈ 35.0%


Retail Margin %


686

≈10%558

≈23%

686

≈9%555

≈3%57220%

508


≈8%54925%

686

DRP

686

35%

508

TIS TCS HECSOthers

50



Channel Profit Margin Distribution of Lenovo Q3, 2009



用户


TOTAL:≈ 30.0%


Retail Margin %


689

893 893

≈8%744

≈20%

≈4%716

≈4%744

893

≈20%

≈6.5%732

893

≈22%

687 714

≈25%

893

≈10%

≈10%812

738≈7%

TIS TCS HECSOthers OSH

Operator Platform

51



Channel Profit Margin Distribution of GiONEE Q3, 2009

用户



TOTAL:≈ 40.0%


Retail Margin %


972

≈10%759

≈28%

972

≈7%741

≈5%77825%

716


≈6%75928%

972

DRP

972

35%

720

TIS TCS HECSOthers

52



Channel Profit Margin Distribution of Dopod Q3, 2009



Provincial Distributo

rs


用户



Retail Margin %

DRP Average Shipment Price /RMB

TOTAL:≈ 30.0%

≈20% ≈15% ≈22% ≈25% ≈10%

2289 2315 2373

2966 2966 2966 29662966

≈8%2472

≈6%2431

≈3%2504

≈5%2431≈3%250

4

≈3%2579

≈8%2696

2496

≈8% Operator Platform


53



Channel Profit Margin Distribution of Sharp Q3, 2009

用户


TOTAL:≈ 28.0%



2868 2868 2868

≈8%

DRP

≈8%2353

≈28%

2241 2241

2494 ≈6%

≈7%2529

≈5%2656

≈15%


Retail Margin %

TIS TCS HECSOthers OSH

Operator Platform

54



Sales Staff ≈290 ≈60 ≈250 ≈60 ≈100

Supervisor≈800

(not including distributors’)

≈240≈400

(not including distributors’)

≈200 ≈300

Promoter ≈4500 ≈3000 ≈4000 ≈1000 ≈1600

Channel Profit ND: 3%~5%FD: 2.5%~4%

ND: 5%~10%FD: 3%~4%

ND: 5%~10%PD: 3%~4% ND: 4%~8% ND: 10%~15%

Rebate to Distributor Flexible Flexible No Rebate Monthly: 2%Quarterly:1% ~2%

Price Protection ND: 3 weeksDRP: 4 weeks

ND: 4 weeksDRP: 4 weeks Buyout ND: TTL

Inventory Buyout

Retailer Gross Profit (non-DRP) 8%~11% 7%~10% ~18% ~4% 10%~15%

DRP Gross Profit 10%~13% 9%~12%

Channel Policies of Manufacturers Q3, 2009


55



Formal Sales Staff ≈200 ≈600 ≈600 ≈800 ≈200

Promoter ≈1000 ≈3000 ≈5000 （ Distributor） ≈8000

(Distributor) ≈1000

PD/SAD Channel Profit 7%~8% 5%~6% 5%~8% 3%~7% 50yuan/unit

Rebate to Distributor Flexible Flexible Non Flexible Non

Price Protection 3 months Total Inventory Buyout Buyout Buyout

Retailer Gross Profit (non-DRP) 22%~23% 14%~20% 25%~30% 20%~25% 22%~27%

DRP Gross Profit 27%~28% 28% 32% ~30% ~30%

Channel Policies of Manufacturers Q3, 2009

http://www.chinabird.com/

56



Retail Profit Margin Analysis by Brand Q3, 2009

Retailer profit margin

SHARP, Dopod, and Samsung had the highest retail profit margin.

11.0%

16.4%

12.1% 12.0%

15.1%

7.6%

13.7%

10.2% 9.9%

13.0%

6.2%

13.0%

8.0% 8.9%10.6%

3.2%

10.5%

5.8% 6.0%8.9%

Nokia Samsung Motorola S.E. LG

>3000 2000-3000 1000-2000 <1000

15.4%

19.1%17.1% 17.0% 18.9%

14.9%17.1%

14.6%16.7% 15.7%

12.9%

16.2%

12.3%13.7% 14.8%

8.9%10.9% 12.0% 11.7%

Lenovo SHARP Gionee Tianyu Dopod



Performance of Main National Distributors4

58



46.1% 46.2% 44.4% 41.6% 47.7% 48.8% 47.0% 45.3% 46.5% 46.3% 49.0% 47.9% 45.7%

Sell-out Volume of Main National Distributors

Market Share through ND ChannelSales Volume(mil.)

Sales Volume of National Distributor (Q3, 2009)

The share of National Distributor fell in the third quarter.

Q3’06 Q4’06 Q1’07 Q2’07 Q3’07 Q4’07 Q1’08 Q2’08 Q3’08 Q4’08 Q1’09 Q2’09 Q3'09

12.7 14.5 14.7 13.016.8 18.3 17.8 16.7 17.4 16.0 17.2 16.4 16.2

59



National DistributorQuarter Sales

Volume（ 1,000）

Quarter Ring Growth

Quarter Market Share

Market Share Change(%)

6696 6.9% 18.8% -0.7

6148 0.9% 17.2% -1.6

2217 15.1% 6.2% 0.2

1095 5.7% 3.0% -0.1

109 25.9% 0.3% 0.0

16263 5.7% 45.7% -2.2

1936 14.3% 5.4% 0.2

Sell-out Volume of Main National Distributors

The sales volume of National Distributors this quarter was 16.2 million. The share of National Distributors in GSM market was 45.74%, and the link relative ratio

declined by 2.16 percent. SYNNEX, NFD of Nokia, went on its fast growing speed.

OthersTOTAL

The Sell-out Volume and Change of the Main National Distributors (Q3,2009)

Note: Including the sell-out volume in OB channel

60



5.1 5.6 7.1 7.7

6.1

10.0 10.2 7.6

5.5 6.9 6.2

7.0 6.2 6.6

3.9 3.8 4.0 4.1 4.1 4.2 5.1

7.2 8.0 7.3 6.7

6.8 6.0 6.1

0.9 0.8 0.9 0.7 0.9 0.9 1.2 1.4 1.5 1.7 1.7 1.9 1.9 2.2

0.2 0.6 0.9 1.4 1.5 1.8 1.7 1.9

0

2

4

6

8

10

12

Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09

PTAC Telling Aisidi PYPO PTIC Synnex

Sell-out Volume Change of Main DistributorsUnit: M

Sell-out Volume Change Trend of Distributors

The gap between PTAC and Telling’s sell-out volumes were becoming larger. The sell-out volumes of Samsung and Sony Ericsson distributed by Aisidi were going on

increasing steadily.

61



GSM Sales Value Change of Main Distributors

The GSM Sales Value of the Main Distributors

In this quarter, the sell-out volume of Telling exceeded PTAC, and the sell-out value of PTAC (5.01 billion RMB) was much less than that of Telling(6.32 billion RMB). It was mainly because that the average retail price of PTAC’s GSM products (767RMB) was lower than that of Telling (963RMB).

The average retail price of Aisidi dropped 30 RMB from last quarter, but was still high (1176 RMB). Aisidi’s sell-out value rosed by 18.5% compared with that of last quarter.

6.5

8.9 9.1 7.7

6.4 6.6 5.1 5.2 4.8 5.0 4.9 5.1

5.9 7.2

7.9 7.3

6.7 6.9 5.6

6.3

1.4 1.4 1.7 2.0 2.3 3.0 3.1 2.9

2.3 2.7

0.4 1.0 1.3 1.9 2.0 2.5 2.1 2.3

0

2

4

6

8

10

12

Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09

PTAC Telling Aisidi PYPO PTIC Synnex

Unit: billion

62



49.9%

67.9% 65.8% 67.8% 70.5%65.1%

60.0%66.2%

60.1%

47.0%

23.4%

13.6% 16.4% 18.7% 16.9% 17.3% 17.9% 15.1%19.8% 20.7%

11.5% 9.0% 7.9%3.6% 3.2% 9.1% 13.0% 10.9%

12.1%17.7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09

Nokia Motorola Samsung SonyEricsson LG SHARP

Sales Volume Structure by Brand

During the third quarter, among the brands distributed by PTAC, the share of Nokia went on the decreasing trend, from 60.1% to 47.0%. However, the share of Motorola and Samsung had increased by 0.9% and 5.6%.

PTAC Sales Volume Structure by Brand

63



37.3%

36.0% 35.2% 36.0%

34.4% 35.7%38.9%

40.3%44.3% 43.9%

40.0%

34.6%32.0%

20.9% 17.8%11.6% 9.1% 8.3% 8.3% 8.6%14.2%

22.2%26.6%

36.0%

41.0% 46.2%45.1%

40.4% 33.2%31.0%

0%

10%

20%

30%

40%

50%

60%

Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09

Nokia Motorola Samsung SonyEricsson LG SHARP

During the third quarter, among the brands distributed by Telling, the share of Nokia decreased slightly, down to 43.9%(-0.4%); at the same time, the share of Samsung dropped from 33.2% to 31.0%. The share of Motorola, SonyEriccson and LG increased by 0.3%, 0.6% and 1.0% respectively.

Telling Sales Volume Structure by Brand


64



In the third quarter, among the brands distributed by Aidisi, the share of Sony Ericsson increased steadily to 9.0%, while the share of Samsung still remained higher than 90% but showed declining trend.

Aisidi Sales Volume Structure by Brand




Performance of Manufacturers at Retail Level5

66



Brand penetration rate can be defined as the percent of stores with any dummy model of a certain brand. This rate can reach 100% for some top brands like Nokia, Motorola and Samsung, so this index can not accurately reflect the coverage change of a brand.

So, we propose a new coverage index, brand effective penetration rate (EPR), to reflect the effective brand coverage . This index is calculated by weighting the simple penetration rate in different sized retail stores (super big sized, big sized , mid-sized and small sized) with the number of each sized stores.

Brand effective penetration rate can well reflect the coverage of each manufacturers, moreover, this index indicates the coverage in the retail stores with monthly sales volume above 30 units.

Note：Criteria of store size: super big （ sales≥1500 items/month ） ;big store （ 800~1500 items/month ） ;mid-store （ 400~800 items/month ） ;small store （ 100~400 items/month ） ;tiny store （ 30~100 items/month）

Brand Effective Penetration Rate =

# of stores with sell-out volume for X BrandTTL # of stores

∑w

Definition of Effective Penetration Rate

67



In the third quarter of 2009, the main brands effective penetration ratedeclined variously except Samsung(+0.8).

Nokia’s EPR declined for maximum percentage (-2.1) and hit a record low in 2009.

Main Brand Effective Penetration Rate

Trend of Main Brand Effective Penetration Rate

68



In this quarter, the main brands’ EPR declined in all channels ， except LG; LG’s EPR in PTAC channel grew by 1.4 percentage.

Effective Penetration Rate by Brand by Channel

Effective Penetration Rate of Main Brands’ National Distributor

Nokia MotorolaSamsung SonyEricsson LG



Distribution Modes for Key New Products6

70



1000

2000

3000

4000

1681c

5000

5320XM

N72

N79

6208C

8600

J808E

E1120C

D988

M628

C3610CI458

I788

L878E

W156

VE66

A3000

V8

W360

A810

EM30

V8 Golden

J110c

K818c

W810c

W200c

P1c

S500C

W958c

2680s

N96

N95

N78

5611XM

1202

5220XM

B5712C

E1100C

C3050C

S3500C

I728

A1600M

A1200

W206

EM325

A1210

W595C

W580c

R306C

F305C

W350

W395c

K858c

C702c

J708

E1110c

D888

F268

S7350C

S5230C

E1360C

I908L

Distribution Mode of Best Selling Products Q3, 2009

Price Tier

Nokia MotorolaSamsung SonyEricsson

http://mobile.younet.com/files/20/20058.html


http://phone.younet.com/files/16/16240.html
































http://image.baidu.com/i?ct=503316480&z=0&tn=baiduimagedetail&word=A1600&in=54&cl=2&cm=1&sc=0&lm=-1&pn=7&rn=1&di=1446301500&ln=2000

http://image.baidu.com/i?ct=503316480&z=0&tn=baiduimagedetail&word=A1200&in=20966&cl=2&cm=1&sc=0&lm=-1&pn=0&rn=1&di=1620078616&ln=2000



http://image.baidu.com/i?ct=503316480&z=0&tn=baiduimagedetail&word=w595&in=6969&cl=2&cm=1&sc=0&lm=-1&pn=6&rn=1&di=774160088&ln=2000



http://image.baidu.com/i?ct=503316480&z=0&tn=baiduimagedetail&word=W350c&in=21302&cl=2&cm=1&sc=0&lm=-1&pn=0&rn=1&di=2019646736&ln=1615

http://image.baidu.com/i?ct=503316480&z=0&tn=baiduimagedetail&word=W395c&in=13130&cl=2&cm=1&sc=0&lm=-1&pn=41&rn=1&di=34807529&ln=358



http://image.baidu.com/i?ct=503316480&z=0&tn=baiduimagedetail&word=J708&in=26001&cl=2&cm=1&sc=0&lm=-1&pn=12&rn=1&di=719108524&ln=2000

http://image.baidu.com/i?ct=503316480&z=0&tn=baiduimagedetail&word=e1110c&in=24875&cl=2&cm=1&sc=0&lm=-1&pn=3&rn=1&di=1598409080&ln=68

http://image.baidu.com/i?ct=503316480&z=0&tn=baiduimagedetail&word=D888&in=14621&cl=2&cm=1&sc=0&lm=-1&pn=5&rn=1&di=1739507052&ln=2000






71



1000 RMB

2000 RMB

3000 RMB

4000 RMB

Distribution Channels of New GSM Products Q3, 2009

Launch Price

Launch Price

PTAC Telling Telling PTAC

2700C(998 RMB)2322C

(425 RMB)2332C(575 RMB)

S5200C(1787 RMB)

S3650C(1542 RMB)

B5702C(3233 RMB)

S8000C(4342 RMB)

S6700C(1836 RMB)

1682C(376 RMB)

Launch Price

No product




72



1000

2000

3000

4000

1000

2000

3000

4000

1000

2000

3000

4000

Distribution Channels of New GSM Products Q3, 2009

Aisidi PTACPTAC Telling TellingTelling

Launch Price

Launch Price

Launch Price

S312C(1158 RMB) GB230

(911 RMB)

GB101(224 RMB)

GT505e(2125 RMB)

KS360(1300 RMB)

SH6110C(1666 RMB)

SH6118C(1515 RMB)



Appendix7

74



Development of GSM Channel Structure by Province Q3, 2009Provinc

e ND DD FD NFD DRP OB Province ND DD FD NFD DRP OB

Guangdong 35% 24% 10% 4% 15% 12% Shanxi 34% 24% 14% 3% 8% 17%

Jiangsu 27% 19% 6% 3% 15% 29% Hunan 25% 16% 9% 4% 15% 31%

Zhejiang 30% 19% 8% 3% 20% 20% Heilongjiang 30% 27% 8% 3% 14% 19%

Shandong 40% 21% 8% 3% 19% 9% Jiangxi 31% 26% 9% 3% 6% 24%

Hebei 33% 27% 7% 3% 16% 15% Chongqing 31% 23% 10% 4% 12% 20%

Sichuan 23% 20% 4% 2% 26% 25% Jilin 29% 21% 9% 3% 17% 21%Beijing 32% 12% 2% 3% 39% 12% Tianjin 44% 19% 11% 5% 13% 8%

Henan 37% 29% 12% 4% 6% 14% Inner Mongolia 39% 23% 12% 5% 8% 14%

Shanghai 26% 10% 4% 3% 41% 16% Guangxi 33% 30% 8% 3% 12% 14%

Liaoning 31% 27% 8% 3% 11% 21% Guizhou 23% 24% 5% 2% 21% 25%Hubei 34% 28% 10% 4% 6% 18% Xinjiang 31% 30% 10% 5% 12% 12%Fujian 30% 20% 10% 5% 12% 22% Gansu 30% 30% 11% 5% 10% 15%Anhui 25% 15% 7% 3% 18% 33% Hainan 29% 23% 9% 4% 5% 30%

Yunnan 23% 29% 7% 2% 15% 23% Ningxia 26% 33% 7% 3% 15% 16%Shaanxi 27% 28% 7% 2% 18% 19% Qinghai 40% 24% 12% 4% 12% 7%

GfK ChinaGSM Mobile Phone – Distribution Channel Report2009 3rd Quarter

Documents

GFK Channel Report 2009Q3(English)