Nokia to halve China operations

Another day, another step towards collapse for Nokia. The once-dominant Finnish company has revealed that it will close two regional sales offices in China. The company will shutter its Chengdu and Shanghai distribution centres and ramp up its operations Beijing and Guangzhou, which will serve as northern and southern hubs for the company’s business in China.

“As part of the announcement and planned changes that we made on June 14, we are reviewing some elements of our China business,” Nokia spokesperson Anna Shipley told Bloomberg in an email.

Despite the closures, Nokia will maintain its “nationwide” market coverage in China, Shipley said.

China, with its growing demand for smartphones and other mobile devices, is a key market for any company looking to compete in the global smartphone industry. Speaking to Dow Jones Newswires in June, the company’s president of Asia-Pacific operations Olivier Puech indicated that Nokia was committed to its business in China and that it planned to “invest heavily” in product development in Asia.

Nokia’s sales have been on a steep decline, with the company’s 30 per cent share of China’s smartphone market dropping to 11 per cent in the first quarter of 2012. Shares in Nokia dropped to a 17-year-low earlier in July, marking a 98 per cent drop from its peak value in 2000.

In June, Nokia announced it was laying off 10,000 employees as part of a broader restructuring plan to address its financial woes, largely the result of a failure to successfully compete with the likes of Apple, Samsung, and HTC.