By Herman Lai, posted Aug 15, 2011 at 8:09 AM, 663 views,

Nokia Facing “Status Problem” In China [UPDATE]

Nokia is currently the leading smartphone vendor in China, but can it maintain the title? Experts are expecting to see a “drastic realignment” in the coming months as Apple expands to new carrier partners, so what that mean is distributors are not likely to import Nokia’s smartphones to put on their shelve. What cause the problem? What makes the giant now a loser? Tell you after the break…

Nokia official responses:

We have a good partnership with the Chinese vendors, they did not pull us out of the shelve. Report that saying distributors are pulling us out is not true.

In Nokia’s 2Q earning report, the company occupied roughly 20-30% of the smartphone market share in China, which had dramatically dropped over the past year. Who gained those? Of course are the Apple iPhone and Google’s Android smartphones. Both of them are eyeing for Top 1 smartphone seller in China, and this seemingly could happen sooner or later.

What is the problem that Nokia is having?

The company used a ludicrous strategy of go-down pricing their smartphone, makes their target audiences (upper-middle class market) no longer want them. They got to understand the consumer behavior of the Chinese are changing, where now a smartphone has turned to be their “status symbol”.

Imagine you are a rich person and you own a Nokia smartphone, one day you saw your maid is having the same phone that you have, what would you feel? Yeah, it makes you look cheap! When Nokia cheapen their smartphone price, it means they want the lower-income consumers, such as the maid, to buy their products.

Why Apple iPhone would be so successful in China? Is it because it has better function? Probably not. What the Chinese usually do with their iPhone is merely making voice call, they don’t really care about the app stores, FaceTime, or any other features. All they care about is the design and the price, it makes them look cool! If you don’t believe, then check out this teen who sold his kidney for an iPad 2. All they want is the “status”!

Does that mean Nokia will fade out in China ?

Not quite. Nokia is still the leader of the market, they have something that Apple doesn’t have, and that’s the distribution across the nation! Apple only has several Apple stores in Shanghai and Beijing, which resulting a lot of fake Apple stores in China. Chinese users have limited chance to purchase Apple products in China, which caused them often buy the iProducts through grey market or from Hong Kong, and obviously, those resellers are not reliable and this could damage the brand image of Apple in China. Rather than that, research found the younger, upper middle class Chinese consumers change their mobile phones every nine to twelve months, and this is the chance to get back.

Can Window Phone 7 helps out Nokia ?

Well, definitely would be better than its flagship mobile OS. However, the China’s Communist Part allegedly is not happy with its Marketplace. How should the company deal with the issue in the upcoming months?

Source: Sina Tech, DigiTimes, Penn-Olson, ZOL
More Coverage: CNBC, Nokia 2Q Report