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Nokia cuts staff at China factory (2)

By Zhang Ye (Global Times)

14:20, October 15, 2012

Under such expectations, the layoff at Dongguan factory was neither the first one nor will be the last one in China, as Chinese labor costs are increasing and sales of Nokia devices are sluggish around the world, said Wei Guangju, an industry analyst at the Beijing-based Adfaith Consulting.

On July 26, Nokia began to cut jobs at its Beijing-based research center, following the consolidation of its Chinese distribution centers in July.

Sales of Nokia devices and services in the second quarter of 2012 decreased 5 percent quarter-on-quarter and 26 percent year-on-year, with a 41 percent drop year-on-year in the Chinese market.

Some experts noted that the layoff at the Dongguan factory signaled Nokia's gradual transition from feature phone manufacturing to smartphones.

"Feature phone is doomed to disappear, as smartphone is the new trend. Among the giant international handset makers, only Nokia largely maintains its feature phone manufacturing operation now," said Wang Ying, an industry analyst at Beijing-based consultancy Analysys International.

Nokia needs to urgently complete this transition as the market demand for feature phones is decreasing sharply, Wang noted.

According to data from Analysys International, in the second quarter of 2012, mobile devices with Symbian OS held 6 percent of China's mobile market, with an average price of 1,170 yuan ($186.7).

But Wei from Adfaith noted that Nokia will not give up feature phone immediately as the company still gained most of its profits from it.

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