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Nokia has a commanding market share the Chinese market, selling 70m handsets last year, equating to 42% of the total. As the Finnish giant faces a squeeze on its 40% global share, it will need to maintain its lead in China as the country - the world's largest mobile territory - moves to 3G. It is well set up for W-CDMA, likely to be used by China Unicom, though it remains to be seen whether it will use its new-found truce with Qualcomm to launch devices for China Telecom's probable CDMA2000 system. The first Chinese cellco to go 3G is China Mobile, which has had the underperforming TD-SCDMA foisted upon it in return for early access to spectrum, and now Nokia is showing its hand and rushing to address one of Mobile's key complaints, shortage of attractive handsets for its new network.

Nokia said it will have cellphones in the market as soon as the TD-SCDMA service becomes commercially active. It has carried out extensive R&D in the technology, in collaboration with various partners, over the years, and can also draw on expertise in its TD-SCDMA infrastructure joint venture with Putian, Potevio.

China Mobile is currently trialling TD-SCDMA services in 10 cities, and will increase this to 38 by the end of June 2009. It has put up 15,000 base stations and reportedly has 175,000 trial customers as of August 24, and is expected to gain its commercial nationwide license as soon as the restructuring of China's telcos is completed.

All its current handset suppliers are Chinese, with ZTE, Lenovo and Guangzhou New Postcom leading the field. These will feel threatened by the entry of the world's largest phonemaker. While TD-SCDMA will be important to Nokia for helping sustain its Chinese share - especially with none of its major rivals apparently close to launching on the network - even more significant will be forming closer ties with China Mobile. With over 400m subscribers, the Chinese cellco is an important customer for Nokia and aims to be one of the earliest operators in the world to deploy LTE, a sector where Nokia will aim to be dominant.

Nokia reiterated claims recently that it would support all three 3G technologies in China, which points to its development of a CDMA2000 line. Although the Finnish vendor, after various attempts at the CDMA market, finally exited last year after the failure of ventures with Texas Instruments, STMicro and Sanyo, it could potentially re-enter now that it has sorted out its differences with Qualcomm, the main CDMA chipmaker. This could lead to a product range to address major operators in China and India, and even to try to improve Nokia's poor performance in the US. However, how far Nokia pursues a CDMA business, in a market that is already facing decline, will depend on the margins it could achieve, and it may choose to stick with its current halfhearted approach of offering a few basic CDMA handsets - mainly for India at this time - through an ODM deal.

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