Zhongyu Telecom, a Guangdong-based mobile phone retailer, plans to open more than 60 stores by the end of this month in Shanghai where Xieheng Communication and Gome dominate the sector.

To penetrate the market, Zhongyu will open outlets in supermarkets like Carrefour.

"Though we're faced with numerous competitors in the distribution sector, we are confident because we offer lower prices," Zhou Yuhu, Zhongyu's market manager said.

The company bought out all models of some series - thus getting a competitive price - from handset makers including Haier and Gionee.

Zhongyu has 3,200 stores nationwide and 2,000 are franchises. But the new-comer will face tough competition in Shanghai from local giants like Gome and Sunning.

These malls provide more varied kinds of consumer electronics and IT products. They are more familiar to consumers.

They also accumulated enough capital to buy handsets in bulk from manufacturers and have a say in the price.

Xieheng Communication, a local phone retailer, announced it would open 300 to 400 more stores in Shanghai next year. It already operates 400 stores.

The Hong Kong-listed Gome, China's top electrical appliance retailer, aims to sell 10 billion yuan (US$124 million) worth of mobile phones this year, a twofold increase from last year, the company said previously.

Gome sold more than 4 million mobile phones last year, pulling in 5.6 billion yuan in revenue, a 100 percent increase from 2004.

Zhongyu's other challenge comes from mobile operators like China Mobile and China Unicom. Carriers can afford to give steep discounts or even offer free phones to people if they subscribe to one of the company's service plans.

Source:佚名