Nokia Crashing in China, Distributors Refusing Nokia Products

Boy, Nokia is having a rough go of it these days.

The Finnish multinational once dominated the cell phone market, but it seems to have underestimated the importance of smartphones. It now trails both Apple and Samsung in international smartphone sales, and usage of its Symbian OS is plummeting.

But at least Nokia still has China, which has long been one of the company’s most solid strongholds…right?

Maybe not. According to their Q2 financials, Nokia’s distribution in China has dropped an impressive 52 percent since Q1, and 41 percent compared to last year. This is larger than the drop they saw in the European market (30 percent) and their worldwide overall drop (20 percent). Of course, we already knew that Nokia wasn’t doing particularly well in China, as these numbers were released on July 20.

More concerning for Nokia is that many of its China distributors are no longer interested in selling its products and have refused to buy them. With plummeting sales numbers and domestic retailers jumping ship, it could be almost impossible for Nokia to make a comeback in China.

Nokia’s Q2 report explains the distributor pullback thusly:

In addition, the sequential decrease in our Smart Devices volumes was driven by distributors and operators purchasing fewer of our smartphones during the second quarter 2011 as they reduced their inventories of those devices which were slightly above normal levels at the end of the first quarter 2011, particularly in China.

In other words, distributors weren’t buying Nokia phones because in Q2 because they still had sufficient stocks of the Nokia phones they purchased in Q1. And that, of course, means that consumers aren’t buying them. Not good news.

This is a startling turnaround for a brand that, just a few years ago, was better-regarded than any other mobile brand in China and that remains one of Asia’s most recognized. When I bought my first cell phone here, back in 2007, I recall asking my Chinese roommate at the time which model he recommended. “It doesn’t matter,” he said, “as long as you get a Nokia.”

That was a scant four years ago, but since then Nokia’s brand has apparently lost its luster. The company is in the process of switching to Windows Phone 7 — they are not planning to offer Android phones — but it will be hard-pressed to reverse the trend if it can’t even get Chinese retailers to stock their phones. Nokia’s China stronghold, it seems, has fallen.

[Via Sina Tech, Image via HKTechNews]