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Capital to support their industrial investment. Almost every one of them finance their project from stock market.

To sum up, new entries need vast capital input to catch up along the high speed of mobile industrial progress, and bear the high risk of investing lose out.

4. Cost disadvantages independent of size

Entrenched companies may have cost advantages not available to potential rivals, no matter what their potential and attainable economies of scale. These advantages can stem from the effects of the proprietary technology, learning curve, access to the best raw materials sources, assets purchased at pre-inflation prices, government subsidies, or favourable locations. Sometimes cost effective advantages are legally enforceable, as they are through patent.

From the viewpoints of new contenders, they should first persuade customers to try new brand mobiles at the expenses of large expenditure, which is switching cost. Normaly, consumers are sensitive to the relevant advantages and disadvantages of any change from the status quo. Switching costs deter existing consumers to change their consuming habit. When facing switching costs, the rational consumer will not switch his supplier.

Fortunately, the market segment aimed by mobile producer is mainly designed concentrating on the young and active people group, whose major objects are novelty, fashion, and pattern. With the precondition of continuous innovation and technology improvement, such cost disadvantages will not construct insurmountable barrier.

However, in short-term, a vast majority of new comers will be Chinese domestic handset companies because of the new policy limiting the foreign brand in China. Being late in mobile handset manufacturing industry, domestic novices should cost big amount of capital to buy special technology to support each day manufacture. It is without question that both the profit margin of domestic handset and growing potential will be largely limited under the huge technical expenditure.

5. Access to distribution channels

A distribution channel contains individuals, systems, and tools responsible for taking the product from the production has to the consumption phase. Use of distribution channel in the aforesaid process improves the efficiency and ensures that the product reaches the right customer in a cost effective manner. Without available distribution platforms, a new contestant can do nothing but be restricted by the existing channel handling companies or even forced to create its own distribution channels.

Once a company has selected and developed a unique product or service, accurately positioned and targeted to consumers, and devised your packaging and pricing, the selection of distribution channels and sales people are then crucial to successful marketing.

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