Sony to retain strong China presence despite moves to cut jobs

Sony Corp displays its digital products, including smartphones, at an exhibition in Guangzhou, Guangdong province. Sony will reduce its operations in the Chinese smartphone market after reporting weak quarterly sales. [Photo / China Daily]

Analysts expect Sony Corp to continue to have a strong presence in China's smartphone market, despite its announcement last week of plans to reduce its exposure to the world's largest handset market by cutting jobs.

Market speculation suggests the Japanese electronics giant is buckling under growing pressure from aggressive Chinese smartphone vendors.

Continuous weak quarterly sales have triggered Sony to reduce its Chinese operations, once a "gold mine" for the Tokyo-based multinational.

Sony Mobile Communications Inc, the subsidiary that makes mobile devices, will stop building smartphones only targeted at the Chinese market, group Chief Financial Officer Kenichiro Yoshida announced on Friday.

The company's mobile communications business is cutting its headcount by about 15 percent, or roughly 1,000 people, although uncertainty still remains over how many exactly of those will be made in China.

A Sony China employee who spoke under anonymity said the Chinese job cuts could occur in its development and sales operation, but that exact layoff plans remain undecided.

Sony has cut its global smartphone sales target to 41 million units from 43 million due to weak smartphone sales in China. It sold 39 million units last year.

Wang Jingwen, a Shanghai-based mobile analyst with Canalys China, however, said the Japanese company is unlikely to abandon its China operation, despite lower-than-expected quarterly shipments.

"China is still the largest single smartphone market in the world, so I don't think it would be a wise decision for Sony to quit," Wang said.

Despite sales slowing in China, consumers still managed to buy more than 100 million mobile phones each quarter during this year, according to the Beijing-based industry consultancy Analysys International.

Wang said the surge in the numbers of local smartphone vendors has made competition increasingly intense for overseas companies this year.

Sony is now out of the top 10 list of Chinese smartphone makers by shipments, with third-quarter shipments in China of less than 1 million, said Canalys.

Zhang Hao, a market researcher at Analysys, said further growth in sales of fourth-generation telecom networks will continue to increase smartphone sales this year, but that local vendors will be the most likely beneficiaries.

Zhang said the market shares of overseas handset makers are also set to shrink in the coming years due to the remarkable growth of local brands such as Lenovo Group Ltd, Huawei Technologies Co Ltd, Xiaomi Corp and ZTE Corp.

Xiaomi and Lenovo are now eyeing Samsung Electronics Co's title as the biggest smartphone maker in the country, as they narrow the gap on shipments from the South Korean electronics giant.

The market share divide between Samsung and second-ranked Xiaomi was only three percentage points in the second quarter, according to Analysys.

Samsung and Apple Inc are the only non-Chinese manufacturers that remain in the top 10 list in terms of shipments.