Motorola in China

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"Motorola wants to be a purely Chinese company. We want to be more Chinese than local companies."

- Lai Bingrong, Senior Vice President - Motorola Inc., President - Motorola (China) Electronic Co., Ltd. in 2000.¹

"China is one of our most important crucial markets and we are still the first and largest US business in operation there."

- Fred Harburg, President, Motorola University, in June 2002.²

"There is a lot of trust on the Chinese side because Motorola has put a lot of investment into the country."

- Crag Watts, Analyst - Norson Telecom Consulting, in January 2003.³

The Chinese Factor

By 2003, with a cumulative investment of $3.4 billion, Motorola Inc (Motorola) topped the list of foreign investors in China. This revealed the importance Motorola attached to the Chinese market. According to Motorola sources, China was a very significant market for the company on account of its size.

Mike Zafirovski (Zafirovski), President and Chief Operating Officer (COO) of Motorola, said, "China is a very, very significant partner and the market here is very important for Motorola worldwide as well as a manufacturing base and research centre for the company."⁴ Motorola's Chinese venture seemed to have been successful. In 1999, Motorola was ranked second, behind Volkswagen⁵ in the Fortune's⁶ list of most favored foreign enterprises in China. Analysts felt that Motorola's performance in China was incredible, considering the country's difficult social and political environment. It was successful in penetrating the Chinese market and was the leader in the Chinese mobile handset market, with a share of over 20% by early 2000s.

According to company sources, Motorola was successful in China due to its understanding of the market and the people and because of the strategies it adopted. However, analysts were skeptical about Motorola's success in China in the future on account of increasing competition from both local and foreign players in the mobile handset market, which was an important product segment for the company.

With the growing demand for cell phones and saturating markets for other consumer appliances, many Chinese consumer appliance companies also entered the mobile handset business thus increasing the competition for multinational companies such as Motorola.

Motorola started feeling the heat by the early 2000s, when it saw its market share declining due to fierce competition in the Chinese mobile handset market. In order to increase its sales and market share, Motorola announced a new strategy in June 2002. Despite this, Motorola continued to lose its market share and analysts were skeptical about its continued dominance in the Chinese market.

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1] Donghui, Yu, Why Motorola Invested Additional RMB16 Billion in China?, www.ultrachina.com, September 29, 2000.

2] Borton, James, Motorola University Scores High Grades in China, www.atimes.com, June 4, 2002.

3] Einhorn, Bruce; Roberts, Dexter; Crockett, Roger O., Winning in China, BusinessWeek, January 27, 2003.

4] Motorola China not for Turning, www.english.peopledialy.com, May 19, 2003.

5] Volkswagen (Germany), Europe's largest manufacturer of automobiles, was the fourth largest automobile producer in the world. Volkswagen manufactured a variety of automobiles including cars, trucks and vans. The company's major car brands included Golf, Passat, Audi, Jetta, Lamborghini, Bentley and Beetle.

6] World's leading business magazine published from the US.