Nokia to Maintain its Investments In China

Despite Nokia Corp.’s NOK -1.58%  plans to cut jobs and streamline operations worldwide, the company won’t compromise in its investment in the development of new products in China, a company executive said Wednesday.

“The company has made a decision to continue investing heavily in Asia in terms of product development,” Olivier Puech, the president of Nokia’s Asia Pacific operations, said in an interview Wednesday. “We will not compromise our commitment to China,” he said on the sidelines of the Mobile Asia Expo, one of the mobile industry’s largest trade shows, which opened in Shanghai Wednesday.

Mr. Puech’s comments came after the Finnish mobile giant last week warned that its operating loss will be worse than it had previously expected and said that it will cut 10,000 jobs in its mobile handset division by the end of next year.

Nokia, which dominated the mobile handset market in the era before smart phones, has been falling behind Apple Inc. AAPL -0.58%  and Samsung Electronics Co. in the lucrative smart-phone market.

Nokia’s handset business faces new challenges in China, where competition is intensifying in the fast-growing smart-phone market. The sharp increase in the number of Chinese players offering affordable handsets is contributing to the growing number of local smart-phone users, but it is also creating a tougher environment for most players.

Mr. Puech said that the emerging ecosystem of handsets and applications around Microsoft Corp.’s MSFT +0.24%  Windows Phone and upcoming Windows 8 operating systems will be key to Nokia’s success.

He said that Nokia’s new Lumia smart phones, which run on the Windows Phone software, have received positive responses in China, while sales have so far been mostly in line with the company’s expectations.

According to Gartner analyst Anshul Gupta, sales of Nokia’s Lumia smart phones have been weaker than expected in western Europe, failing to compensate for slumping sales of the company’s older handsets that run on its own Symbian operating system.

Mr. Puech said that an ecosystem of handset makers and application developers is quickly evolving around Windows mobile operating systems.

In China, the number of Chinese applications for the Windows Phone system created by local developers has been sharply increasing, he added.

“We believe that there is room for a third ecosystem,” in addition to those revolving around Apple’s iOS and Google Inc.’s (GOOG) Android–two dominant operating systems for smart phones and tablets.

He added that Nokia expects Microsoft’s new Surface tablet, announced Monday, to contribute to a further growth of the Windows mobile ecosystem, which in turn will help Nokia sell its own Windows-based mobile products.

Marketwatch