About 500 million Chinese people, or one out of every three Chinese, will own a mobile phone by the end of 2007, a latest industry research report said.

Thirty percent of users will own cell phones that would be compatible with the next generation of mobile telecom technology, according to the report.

As China's mobile phone penetration grows to one-third from the current 18 percent, the value of the telecommunication-related market will reach 520 billion yuan (US$62.65 billion) in 2007, said CCID Consulting Co Ltd, a Hong Kong-listed information industry-consulting firm, in its report.

Currently, 244.12 million users in the country own mobile phones, slightly fewer than 244.93 million fixed telephone subscribers.

"The new mobile phone users will create a multi-billion-dollar market," Li Dongping, an analyst at CCID, said in the latest report. He also predicts that 30 percent of Chinese mobile phone users will have third generation handsets in 2007.

These phones allow customers to exchange voice and data more quickly than the existing cell phones, making it possible to hold videoconferences on handsets.

However, to grab a share of the telecom pie, domestic and foreign phone makers have to survive the competition and price war on the Chinese mainland, which has caused handset prices and phone makers' profit margins to plunge.

Ningbo Bird Corp, the largest homegrown handset maker that announced its third quarter earnings yesterday, is a good example of how tough the market is.

During the three-month period ended on September 30, the Zhejiang-based company's profit margin dropped to 16.7 percent from last year's 23.84 percent.

Bird said its profits in this quarter jumped 9.8 percent to 60 million yuan(US$7million), or 0.38 yuan a share, compared with a year ago. In the period, the company's revenue rose 38.6 percent to 2.26 billion yuan.

Meanwhile, mobile phone operators also have to expand their business scope to improve their income as average revenue per user is declining too.

"China Mobile and China Unicom, the current mobile operators, have already begun to provide value-added services such as short message system, or SMS," according to Li of CCID, adding that other services being offered to customers include receiving and sending e-mails, down-loading games and being able to browse Websites on their mobile phones.

(Shanghai Daily October 28, 2003)