Research In Motion tries for bigger piece of China market

MONTREAL — Research In Motion (TSX:RIM) is trying to sell more BlackBerrys in China, where it will have to win over consumers against domestic players, international heavyweights like Nokia and Apple’s sought-after iPhone.

MONTREAL — Research In Motion (TSX:RIM) is trying to sell more BlackBerrys in China, where it will have to win over consumers against domestic players, international heavyweights like Nokia and Apple’s sought-after iPhone.

The BlackBerry maker announced Monday a distribution deal with Hong Kong-based Digital China to try to increase it’s business in China.

“This is one of a series of steps that RIM will take to grab a significant amount of share in China,” said IDC senior analyst Kevin Restivo.

“Right now it has virtually no market share there,” he said from Toronto.

In 2010, shipments of mobile phones to China are expected to grow eight per cent versus no growth in the United States, he added.

RIM has only one smartphone the Chinese market, the older 8700, said Restivo, senior analyst in mobility at the research firm.

It uses trackwheel technology to read email and browse the web instead of the newer track ball to do these tasks.

Piper Jaffray analyst Michael Walkley said RIM’s competitors are already established in China, but the deal will improve the Waterloo, Ont.-based company’s distribution.

Nokia has more than 35 per cent market share in China and Samsung, LG and Motorola are already there, too, Walkley said from Minneapolis.

“Most of RIM’s major competitors have been there for over a decade,” he said.

Even though the touchscreen iPhone has been a slow seller so far in China, Walkley said he believes it will fare better than the BlackBerry.

“From our travel to China, it’s very much a touchscreen-oriented market.”

Walkley said RIM will have to reach consumers with models such as the BlackBerry Storm, its new touchscreen phone.

“That’s where I struggle with RIM being so positive to get into China,” he said.

“Other than big companies who have English-speaking employees and a lot of them already have RIM through their organizations, just getting a consumer push it would have to be through some of their new touchscreen products.”

RIM also faces competition from more than 40 domestic Chinese mobile phone companies, Walkley added.

RIM said the agreement will increase its business in China.

“Business partnerships are an important aspect of RIM’s strategy and Digital China’s extensive knowledge and market presence will further expand the opportunity for RIM in China,” co-CEO Jim Balsillie said in a statement.

Restivo said the BlackBerry maker needs more of these deals.

“It needs more partnerships with Chinese carriers if it’s going to make inroads into the Chinese market.”

RIM has had a deal with China Mobile since 2006 to support international users of BlackBerrys in that country. There were reports that RIM was going to announce a partnership deal with China Mobile on Tuesday.

Restivo said IDC has recorded shipments of BlackBerrys to China since the third-quarter of 2007. He noted that RIM has developed different language abilities on the BlackBerry to accommodate different cultures.

Technology analyst Duncan Stewart said RIM, Apple and others will go for as many distribution deals as possible to sell their phones.

Stewart said the challenge for RIM will be to make the phone affordable to Chinese consumers, who have a stronger history of text messaging and calling rather than emailing.

“Why buy a $600 device that’s incredibly good at email when I don’t use it for email,” said Stewart, director of research and analysis at DSAM Consulting in Toronto.

Digital China said it’s the country’s largest information technology services provider with regional centres in 19 cities and 8,300 employees.

RIM shares closed up $1.34 or about two per cent at $63.40 on the Toronto Stock Exchange on Monday.

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