Pending Chinese Quotas Threaten Motorola, Others

China is preparing production quotas and import curbs for foreign manufacturers of mobile handsets in a move to improve the market performance of fledgling Chinese manufacturers. Motorola Inc. of the U.S., L.M. Ericsson Telephone Co. of Sweden, and Nokia Corp. of Finland will be the outsiders hardest hit: Together they share 85% of the Chinese market, the world's fastest growing in the mobile phone sector. Speaking in Tianjin, where Motorola makes most of the phones it sells in China, Li Yong, chairman of TEDA, a local technological zone, said: "Government policy is to promote home-grown manufacturers in the mobile phone industry. My worry is that, when the quotas and restrictions are announced, the U.S. company (Motorola) will be limited this year to last year's sales." Motorola has been close to doubling its Chinese production year on year. It produced 4.9 million units in 1998, and 9.8 million in 1999. China, with 42 million users, ranks as the world's No. 3 market for mobile phones, and is now close to overtaking Japan, which currently has 46 million users.

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