Nokia will introduce new high-end models hoping to oust arch-rival Motorola Inc as market leader in China and boost the average price of its phones, David Hartley, general manager of Nokia's mobile phone unit in China, said.

"Currently it's neck-and-neck with Motorola and Nokia, in terms of market share, and with our strategy this year... we expect to open up a significant lead," he said in an interview.

Hartley declined to say what Nokia's market share in China was, but said he expected the total number of mobile phones to be sold in China this year to reach 60 million.

Competition in China -- the biggest market for mobile phones in the world and Nokia's number two market -- has grown fiercer since domestic brands gained market share last year. Nokia, maker of one of every three of the world's cell phones, plans to launch 12 models to China before the end of the summer -- half of them high-priced models -- compared to only three new models in the first half of last year, he said.

Those models will include a phone with a digital camera, a phone made for games and phones supporting new technologies, such as general packet radio service (GPRS), he said.

By boosting the average selling price of its phones in China, Nokia hopes to see its revenues to grow faster than China's total handset market, which executives at the company said earlier this month would grow by at least 10-15 percent this year.

"We expect our revenue growth to be greater than 20 percent this year in China," Hartley said.

BOOSTING MARKETING BUDGET

Nokia will boost its marketing budget significantly and increase its presence in some of the midsize and smaller Chinese cities as it seeks to fend off Chinese brands, Hartley said.

"They've had a strategy of focusing locally. Now we need to do the same," he said, referring to brands such as Konka, Haier and TCL.

"We've done our homework and we know where we need to go and what we need to do to put it in place," he said.

"That means we have to broaden our organization to do it, and push decision-making much closer to the marketplace in order to achieve that."

Hartley said in some cases, Nokia was working directly with retail chains in some cases, rather than going through distributors.

Another reason Nokia must secure its market position in China was the likelihood of a coming wave of major foreign brands to which China was likely to give new access.

"We'll see some of the Japanese and Korean brands coming into the country which previously have been, to an extent, restricted," he said.

( February 26, 2002)