Ericsson in China

Sony did not have a history of very strong sales in the Chinese handset market. Sony Ericsson China was formed with the intention of recovering market share. Ericsson formally exited the handset market in 2002, and the entire responsibility of handset design, production, sales and support was transferred to the new company. Combining strengths from Sony (entertainment and design) and Ericsson (mobile communications technology and R&D), the company aimed at creating a new consumer segment, with who laid more stress on enhanced value for money. Advanced features like imaging, entertainment and interactivity were incorporated in the new Sony Ericsson handsets. Since its inception in 2002, Sony Ericsson was launched several handsets with features designed specially for local customers...

The obstacles faced by Ericsson included stiff competition from multinational companies like Nokia and Samsung, domestic competition from companies like TCL and ZTE, and shifting loyalties of consumers from multinationals to affordable local companies. Ericsson's share in the mobile handset market dropped from the leadership position in the late 1990s to less than 2% in 2002. Even the joint venture with Sony failed to reverse the trend. Analysts felt that in the face of such intense competition, the company needed to rethink its policies. While localization had helped, pricing and quality were two aspects, which had to be looked at afresh. Affordability was a primary reason for Ericsson losing its market to local competition...