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Moreover, the potential rival’s expectations about the reaction of existing competitors also will influence its decision on whether to enter. The company is likely to have second thoughts if incumbents have previously lashed out at new entrants.

Evidently, potential rivals should face the following reaction by incumbents:

As it is mentioned above, there are now about seventy companies granted license to produce mobile, and with the reformation of approval system, more competitors have opportunities to enter. According to the information from NDRC, domestic mobile producing capacities increase fastly, the annual mobile output will reach 0.5 billion, while the estimated operating time is only 50%. Apparently, there exist serious producing capacities surplus.

The top mobile producing incumbents (especially foreign top 4 companies in China such as Nokia, Motorola, Sony-Ericsson and Samsung) have experienced very long period to strengthen their vertical chain integration, which prevents new comers from sharing upstream and downstream resources.

Price promotion regularly, gradually becomes a common means to attract potential consumers and compete for consumers sincere to other brands. So, new comers to mobile industry should debase their original profit estimation to adapt to the market shift.

All the above measures construct certain difficult defence barriers by the incumbents. Under the threat of incumbents’ retaliation, new contenders had better to rectify their actual plan to avoid possibly fatal risks. According to the existing position, trans national brands already took up the top position of handset industry in China, grasped developing opportunities, and formed the barrier to after entering rivals.

Section 2. The power of buyers

From the standpoint of mobile manufacturers, their customers are different levels of wholesalers and retailers. Usually, they can force down prices, demand higher quality or more service, and play competitors off against each other, in order to make extra profit from purchase bargaining. Surely, the bargaining power of wholesalers and retailers will be intensified, because end-consumers tend to be more prices sensitive if they are purchasing products that are undifferentiated, expensive relative to their incomes and of a sort where quality is not particularly important.

From the viewpoint of top mobile manufacturers such as Nokia, Motorola etc., they have carried out a series of channel restructuring actions in recent years. Different kinds of sales channels are combined together to realize flat selling net for successful selling performance. Nevertheless, their major selling approach is still general agent of different levels. The mobile giants usually wholesale their handsets to several general agents first, and then these mobiles will again be wholesaled to provincial and local wholesalers, until finally local retailers buy these goods before selling to end-users. This kind of agent system facilitate本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。