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TCL profit rises but margin falls
( 2003-08-21 09:27) (eastday.com.cn)

TCL Communication Equipment Co Ltd yesterday said its profit jumped by nearly 30 percent in the first half of this year. But the second-largest domestic mobile phone maker said its profit margin shrank in the period, as China's handset market became increasingly crowded.

TCL Communication's first-half net profit hit 145.18 million yuan (US$17.49 million), or 0.77 yuan per share, 28.2 percent higher than the year-ago level. The company posted sales of 5.26 billion yuan during this period, 51.2 percent higher than a year ago.

However, the Guangdong-based company said its gross profit margin slid by almost 6 percentage points to 21.19 percent as the competition in China, the world's largest mobile phone market, became more intense.

"We cut our products' price to boost our revenue so that we can survive the intense competition. But our profit margin dropped," said Wan Mingjian, chief executive of TCL Communication, in the financial report released yesterday.

Recently, TCL Communication slashed the prices of its two color-screen handsets by half to about 1,500 yuan.

Currently, TCL Communication occupies 11.64 percent of China's mobile phone market in the first half of this year, ranking it the third after the 15.01 percent of Ningbo Bird Co Ltd and 14.21 percent of Motorola Inc, according to the Ministry of Information Industry.

TCL Communication is not the only one to suffer a price cut as the average price of a mobile phone has slid to 1,767 yuan, 13.2 percent lower than a year ago, according to IT consultant, CCID Consulting Co Ltd.

The Beijing-based firm also said the fierce competition will change the landscape of China's mobile phone market, as companies cut prices and expand production capacity to survive.

TCL Communication opened its second manufacturing plant in Hohhot, the capital city of Inner Mongolia Autonomous Region, on Monday. The 48,000-square-meter plant has an annual capacity of 5 million handsets, almost doubling its current production capacity.

This year, it will make 2.5 million handsets.

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