Investors seeking to plunk down money in mobile phone manufacturing are being warned to watch their step because of sizzling competition and overloaded production capacity in the sector.

The investors are allowed equal opportunities to meet newly-unveiled market entrance requirements, according to an approval scheme released yesterday by the National Development and Reform Commission, a cabinet department overseeing economic development. The scheme says that "every investor who meets market entrance requirements can pour their money into the sector."

But since 1999, the government started a strict licensing scheme to regulate investment in mobile phone manufacturing and so far only 36 handset manufacturers hold licenses.

"We are changing our way of supervising the sector as China is becoming more and more market-oriented," said a division chief from the commission's department of high-tech and new technologies.

He said the government is decentralizing approval rights and streamlining procedures in the sector. Investors deciding to become handset makers in China will no longer be required to submit investment feasibility reports. Only applications, which need to contain basic information about the proposed projects must be submitted.

In line with the government's investment reform initiatives begun last summer, the commission will be required to respond within 20 days to the applications.

The new scheme, which can be seen on the commission's website www.ndrc.gov.cn, included a list of documents that must be prepared by investors and checked by the commission. Its staff will examine the investors' application to en-sure compliance with land use requirements and environmental protection measures.

The official admitted that "it's hard to get more investment opportunities" because the country is going to rectify the overheating mobile phone manufacturing.

Yesterday's new scheme is followed by the commission's warning of overloaded mobile phone production capacity in China last week.

China has become the world's largest mobile phone manufacturer producing 240 million handsets and exporting about 140 million in 2004.

In an interview with China Central Television, Xiao Chang, senior economist of China Information Industry Association, predicated that production will rise this year as new producers begin manufacturing.

He said another 40 firms will start manufacturing mobile phones this year. The total annual production amount may exceed 500 million units, which will account for more than 80 per cent of the world's total consumption.

(China Daily February 22, 2005)