Beijing Tianyu Communications: Winning in the 3G Era

As emerging markets such as mainland China grew to be vital for the global commercial players, leading mobile telecommunication giants increasingly turned to China for opportunities. China's fast-expanding mobile telecommunication market became a throat-cutting battlefield for both international and local players. Among these competitors, Rong Xiuli's Tianyu had the local advantages. In order to sustain Tianyu's hardearned success, Rong decided to upgrade Tianyu brand and firmly secure a foothold in the 3G era. In 2002, Rong Xiuli closed Beijing Benephon, the then largest distributor of Samsung Mobile Phone in the Chinese market, and established Beijing Tianyu Communication Equipment Co. Ltd (hereinafter referred to as “Tianyu”) entering the handset manufacturing industry. Despite the growing pains in the beginning, Tianyu eventually went ahead of other domestic mobile phone manufacturers. In 2008, Tianyu reached a sales volume of 24 million mobile phones and a market share of more than 6%, ranking after Nokia, Samsung, and Motorola in the Chinese mobile phone market. A transition from the second generation (2G) communication technologies to the third generation (3G), however, was initiated at the end of 2008. Mobile phone manufacturers responded by investing heavily on technology upgrades. 3G also elevated the position of telecommunication operators in the industry value chain. As such, Tianyu's advantage in the 2G market could not necessarily guarantee its success in the 3G market. Adding to the uncertainties, demands for 2G mobile phone dropped sharply due to the 2007–2008 global financial crisis. Despite the oppositions from many colleagues, Rong Xiuli launched a campaign to win the 3G market, reconfiguring almost all the resources to the new business. The case describes Tianyu's success in the 2G mobile phone market and its entry into the 3G market.