Cellphones, one of Korea's three major export items along with automobiles and semiconductors, are faltering in the China market. Having grasped the China market on the back of technologies they absorbed from Korea and Taipei, indigenous Chinese cellphone manufacturers are now targeting the United States and Europe, the nucleus export markets of Korea.

Based on Chinese customs statistics, the Korea Trade Service said Thursday that Korea exported US$396 million worth of cellphones to China during the first half of this year, down 64.8 percent from the same period last year. Meanwhile, indigenous Chinese handset makers' market share in China accounted for 45 percent in the January-June period this year, up 9 percent from a year earlier, according to GFK, a German-based research institute.

As a consequence, the alarm is sounded to 200-plus Korean cellphone makers like LG Electronics, Pantec, Telson Electronics and VK, but excluding Samsung Electronics which supplies to China mainly expensive items. Telson Electronics, a backbone maker, became insolvent early this year due to plummeted exports to China, among other causes. Samsung Electronics employs a strategy of distinguishing itself from Chinese markers by continuously supplying high-priced products like 1.3 million pixel camera phones, popular among young and newly wealthy Chinese.

The remarkable advance made by Chinese makers, it is said, owes greatly to near-sighted strategy on the part of Korean and Taipei companies that plunged into heated competition. In a bid to attack the China market, hundreds of mobile phone makers had poured their latest technologies to their local counterparts. Offensives by Chinese makers who have steadily accumulated technologies are anticipated to advance to such major markets as America and Europe. Chinese makers like UT Starcom reportedly eye taking over Telson Electronics and Maxon Telecom, mainstay Korean firms, now on offer for sale.

UT Starcom has taken over Audio Box, a leading logistics network in the United States, thereby securing a beachhead for an advance to America. Once it manages to secure a Korean its code division multiple access (CDMA) manufacturing company, the Chinese firm is said to be ready to assault the United States. Korea is most competitive in the world in CDMA.

The government and business circles are merely looking at such a threat posed by China. The Ministry of Information and Communications says it cannot interfere with business acquisition and merger. Major companies like Samsung and LG Electronics pay little attention to the Chinese firm's attempt to acquire a local company.

Industry experts, however, hold that the government and business circles should positively cope with China's strategy of securing CDMA technology in the country. Once China manages to do so, they said, it may deal a serious blow to the global CDMA export market like America that Samsung Electronics, LG Electronics and Pantec have built up so painfully.

(Wu Byung-hyun, penman@chosun.com )