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Datang Telecom, a phone accessory supplier, yesterday reported a 94 percent drop in profit for the first half of the year.
The huge down-turn has been blamed on the restructuring of China's major telecom operator.
The company said it earned 894 million yuan (US$108 million) in the first six months. Its net profit reached 4.78 million yuan (US$575,900), which is 94.2 percent less compared to the same time last year.
Although the market was prepared for bad news from suppliers, Datang's significant drop still astonished investors.
The company said the bad performance was a result of decreased investment in China's major telecom operators.
China Telecom, the former top purchaser of equipment, was split into two earlier this year.
Suffering because of the restructuring, China Telecom stopped buying equipment.
The process will influence the buying rate of equipment for at least one year, according to a senior manager of China Telecom.
The manager, who did not want to be named, said this year would be a tough period for telecom suppliers across the board.
Datang Telecom was not available to comment about its disappointing performance.
But the company said in a written statement that it expected a better performance for the remainder of the year as the restructuring of China Telecom finished in May.
Other domestic telecom equipment manufacturers have also been getting nervous with the domestic market. Some, including ZTE (Zhongxing Telecom) and Huawei, leaders in the industry, tried to make up for depressed domestic sales by expanding exports to other developing countries.
（China Daily August 15, 2002）
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