Chinese people will buy more than 100 million handsets in 2007, spurred by an increasing user population and a desire to swap old phones for new ones, the domestic research house Analysys International said.

The Beijing-based information technology and telecommunications consulting firm said in a report that the shipment of mobile phones in 2004 reached 73.3 million units, seeing a 21 percent year-on-year increase.

The firm predicted shipments in 2007 will break the 100-million mark to reach 112 million units.

"In 2004 the penetration rate in big cities was already very high, but the increase of first-time mobile phone users in small cities and rural regions was very fast," said Gao Xiaobing, a telecom analyst with Analysys.

He estimated only one in four Chinese used mobile phones at the end of 2004, so the market potential is huge.

Another stimulus to the growth of mobile phone sales is a replacement wave, especially in big cities.

According to Gao's firm, about 20 percent of the phones sold last year were replacement phones and this ratio will continue to rise in the coming years.

More than 63.07 million GSM (global system for mobile communications) phones were sold last year, while the figure for CDMA (code division multiple access) phones on China Unicom's network stood at 10.23 million.

Although the market continues to grow, competition is also heating up. Analysys' statistics show Nokia overtook Motorola to become the biggest player in the market with 11.53 million handsets sold in both GSM and CDMA standards. Motorola sold 9.94 million units.

Motorola had been the biggest handset maker in the domestic market for almost 10 years with its aggressive investment strategy.

However, competitors like Nokia and Samsung have increased their presence in the world's biggest mobile phone market.

Local brands, which had been gaining market share in recent years, suffered from the counterattacks of international players and internal weaknesses.

The market share of local brands in the GSM sector fell from 46 percent in the first quarter to less than 40 percent by the end of 2004.

(China Daily January 19, 2005)